Shylocks

Tuesday 25th July, 2023

There is a widely-held misconception that Sri Lanka is a land where every prospect pleases, and only politicians are vile. The less said about politicians, the better; suffice it to say politics is a stinking swamp that has to be drained if the country is to achieve any progress, but the fact remains that most others are no better.

There has been a considerable drop in the general price level over the past several months, and the production costs of most commodities have decreased as a result, but the prices thereof remain extremely high. Bakers and eatery owners continue to exploit the public by keeping the prices of their products artificially high. Some tender-hearted bakers, who are the exception that proves the rule, have been considerate enough to sell bread at Rs. 110 a loaf; they say they are earning profits. Thus it may be seen that the public can be granted relief if the government cares to crack down on unscrupulous businesspersons and put an end to their exploitative practices.

The Consumer Affairs Authority (CAA) does precious little to protect the rights of consumers; its bark is worse than its bite. One wonders whether the CAA officials are in league with the errant members of the business community. They must be made to explain why they have not stepped up raids.

Banks are the biggest culprits. They stand accused of making a killing by slashing deposit interest rates while keeping lending rates extremely high. Some of them have even arbitrarily increased the fixed lending rates, claiming that they have no other way of retaining their stability. They have informed their hapless customers, who are left with no alternative but to stand and deliver, so to speak, that they are following the Central Bank (CB) instructions. Their claim is a blatant lie, for the CB has specifically asked them to bring down the lending rates. This is something the CB should look into forthwith because such bogus claims tarnish its reputation, and direct public anger at it while the greedy bankers are fattening their bottom lines at the expense of the public. The state banks which do so are helping make a strong case for the privatisation of the state-owned enterprises; they have made a mockery of their much-publicised claim that they were established to serve the interests of the ordinary people.

The CB has, in a letter to the Sri Lanka Banks’ Association, rightly observed that the deposit interest rates of the banking sector have been reduced significantly while the lending rates continue to be downward rigid. It has said such rigidity in lending rates will be counterproductive in the process of envisaged economic recovery, and the faster normalisation of interest rate structure will benefit not only the businesses and individuals but also the banking sector through the expected improvement in the quality of credit. Pointing out that the interest rates charged on certain credit facilities are excessively high and have to be reduced in view of a decrease in the market interest rates, the CB has said this fact was brought to the attention of all Chief Executive Officers of banks at the monthly CEOs’ meeting at the Central Bank, chaired by the CB Governor. It has urged all licensed banks to take immediate measures to adequately reduce the lending rates applicable to all lending products. The banks, however, carry on regardless, despite protests, and there is absolutely nothing the aggrieved customers can do.

The CB has promised to intervene on behalf of the hapless customers unless the banks pass the benefits of decreasing interest rates on to them, but such action will have to be coupled with a legislative intervention if it is to be effective. This situation warrants the attention of President Ranil Wickremesinghe, who is also the Minister of Finance. There is a massive build-up of public anger in the polity, and it has to be defused for the consolidation of political stability, which is a prerequisite for economic recovery, and this goal will remain unattainable if the people are denied the benefits of steps being taken to revive the economy.