The Hon. (Dr.) Anil Jayantha - Minister of Labour and Deputy Minister of Economic Development

¶ 01 Mr. Presiding Member, I thank the Hon. Rohana Bandara for this Private Members’ Motion on co-operative rural banks and the importance of their supervision.

¶ 02 “Bank” has a defined meaning under the Banking Act, No. 30 of 1988. Banking business is primarily the authority to accept public deposits repayable on demand—current accounts, cheques, drafts, etc.—and requires a Central Bank licence. Many financial institutions handle money and are colloquially called “banks,” but unless they conduct banking business under licence, they are not banks. Co-operatives are broader than finance: they can engage in production, domestic and international trade, and support structured economic development. Our Government, through the Ministry of Trade, Commerce, Food Security and Co-operative Development, has Cabinet approval for a special committee to study how to broaden co-operative activity, including finance, responsibly.

¶ 03 Problems have arisen because some co-operatives gravitated excessively towards financial business without the safeguards of licensed banking, creating instability. Contrary to a claim made here, co-operatives do not hold “trillions” of rupees. Physical currency in Sri Lanka is about Rs. 1.6 trillion; bank money (deposit money in the banking system) is about Rs. 14 trillion. Co-operatives handle physical cash and savings within their networks; without sound controls, that is risky. Hence, regulation and supervision are required. Under the Provincial Councils Act and co-operative statutes, Provincial authorities and the Department of Co-operative Development under the line ministry have roles. We aim to expand co-operatives, not curtail them, and integrate them into the wider economy.

¶ 04 We have stabilized the formal banking and monetary system. Constructive opposition should help us build on that stability. If there are concerns—such as on container inspections or tariff matters—bring evidence; investigations have been transparent and ongoing. On the US tariff issue, Sri Lanka is actively engaged; among 22 countries that have so far received courtesy letters, Sri Lanka currently has the highest relative reduction vis-à-vis the assigned band. The US sets a maximum band of 50%; Sri Lanka’s notional rate was 44%. We are working to reduce it toward 30% and conclude a bilateral arrangement by 1 August. We remain confident of a favourable outcome.

¶ 05 Let us build a stronger co-operative sector that supports livelihoods and production, with fiscal and monetary discipline and appropriate State support.

¶ 06 Thank you.