In a media statement, the Sri Lanka Banks’ Association (SLBA) representing all licensed banks, including state banks,
public listed companies, and branch offices of international banks, emphasised that the suspension of parate execution would not safeguard mortgaged assets of defaulters.
This is because banks would continue to pursue mortgage actions through legal channels.
The SLBA clarified that the mortgage action process involves presenting individual cases to bank boards of directors and publishing notices in the media.
It cannot be unilaterally implemented by bank officers.
Parate execution, one option available to banks in debt recovery, helps mitigate delays in the process.
However, it is utilised as a last resort before resorting to legal action, until laws are amended to incorporate the proposed suspension approved by the Cabinet.
Highlighting the parate rights of banks as a crucial legal remedy for debt recovery, the SLBA emphasised its necessity when borrowers fail to cooperate in developing feasible debt repayment plans.
Continuing unsustainable businesses is not viable, it noted, especially considering the interests of bank depositors.
Expressing concern over state intervention in debt recovery laws without consulting banks, the SLBA warned of increased borrowing costs for all borrowers due to government decisions.
It argued that unilateral interventions weaken banks’ ability to support economic revival.
(LNW)
