Sri Lanka probing primary dealer

ECONOMYNEXT - Sri Lanka's central bank is probing a primary dealer in Treasuries who is alleged to have sold securities belonging to clients and are unable to repay them, Central Bank Governor Arjuna Mahendran said.

"The Central Bank is on top of it and we are investigating," Governor told reporters Thursday.

Governor Mahendran said he had seen the reports in the press relating to the primary dealer.

Media reports said the primary dealer with whom the pension fund of a state agency had entered into a securities transaction several years ago, apparently no longer had asset and the money could not be recovered.

Following allegations made shortly after the setting up of primary dealers that some of them were using the same security to borrow money from clients twice and re-invest them in private securities, the central bank introduced a safeguard in the form of a central depository account.

A primary dealer who either sells a Treasury bill or bond outright to a client has to place the security in a CDS account in the client's name whose balance can be checked including with period statements.

There was also market speculation that the dealer was not able to make payments on time.

Governor Mahendran said there was no systemic risk.

"If one company is finding it difficult to pay its depositors, there are windows through which the central bank will lend money to that company make good those deposits.

"Nobody needs be worried."

Asked whether the company had met the capital requirement of the Central Bank, Mahendran said the capital had been raised to a billion rupees from 300 million and all of them have reached the level.

Apparel exports can top US$ 16 bn revenue with GSP - Senasinghe

International Trade State Minister Sujeewa Senasinghe says Sri Lanka’s total apparel exports could reach the US$ 16 billion revenue mark if the suspended GSP plus facility is granted. To reach this target, the apparel industry also needs to be made into an industry of innovation for which GSP plus facility is important,Senasinghe said.

He said Sri Lanka’s overall exports as a share of GDP has been on the decline over the years. Commenting on the government’s ambitious plan of setting up 5,000 industries across the country in the future, Senasinghe assured that the government will take every possible step to further develop existing industries such as tea, rubber, coconut and service industries.

He also laid emphasis on heavy industries as a priority item of investment.Under these measures, the minister aims for a three-fold increase in overall export earnings.

The government will not only facilitate foreign investors to set up operations here, but also obtain their technical know -how and assistance to establish develop Sri Lankan based businesses to create a conducive environment for trade and investments and business links with the international investors. Support to commence manufacturing of electric cars, three wheelers,pharmaceutical products and computer chips in Sri Lanka will be provided,Senasinghe said.

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