PM says the process of property auctions by banks due to defaults should be reviewed

Prime Minister and Minister of Finance, Mahinda Rajapaksa emphasized the need to appoint an authorized person to look into the process of property auctions carried out by the banks due to defaults. 

The premier pointed out that it is important to look into the need for the auction and the financial history of the borrower before going ahead.

There is a need to amend the existing ordinances so that property cannot be auctioned without the approval of a relevant authority.

The Prime Minister was addressing a meeting at the Ministry of Finance last week to discuss the problems faced by industrialists.

He  said the method of auctioning property by banks should be revised and pointed out the need for a third party to mediate in such a situation instead of both the banks and the borrowers.

 He emphasized the need for an authorized ombudsman to intervene in such cases and instructed the authorities to prepare the necessary legal framework.

He also said that when giving loans with property as collateral, the borrower should look into whether the house where they live is being pledged. 

The Prime Minister said that if the house had to be auctioned for any reason, the country would be left with another homeless family even if the bank concluded its transaction. The premier also advised to look into the possibility of a revision of the current methodology.

The Banking Act is to be amended to strengthen the powers of the financial ombudsman. 

Minister Wimal Weerawansa, State Ministers Ajith Nivard Cabraal, Shehan Semasinghe, Secretary to the Treasury S. R. Attygalle, and representatives of the Central Bank, People’s Bank, Bank of Ceylon, Regional Development Bank were present at the discussion. (LBO)