The Committee on Public Enterprises (COPE) has issued directives to the State Mortgage & Investment Bank (SMIB) aimed at addressing its administrative shortcomings and transforming it into a more competitive financial institution while maintaining its core objectives.
These recommendations were formulated during a recent COPE meeting, which involved summoning officials from the Finance Ministry and the State Mortgage & Investment Bank.
During this meeting, COPE Chair MP Prof. Ranjith Bandara and committee members scrutinized the bank’s audit reports for the years 2020 and 2021, as well as its present performance.
One of the focal points of discussion was the delay in implementing a new core banking system, as previously recommended during a prior COPE meeting. SMIB officials provided assurance that progress is being made on this front, with a commitment to completing the project by July 2024.
Furthermore, the committee underscored the necessity of enhancing the bank’s commercial operations to bolster its asset base and elevate its overall performance. Emphasizing the importance of maintaining a competitive edge while adhering to the bank’s core objectives, the COPE Chair stressed the need for innovative and attractive branding strategies (rebranding) to establish the bank’s presence more effectively among the public.
Addressing a significant financial setback, it was revealed that SMIB incurred a loss of Rs. 68 million in 2017 due to individuals obtaining loans through the submission of fraudulent documents. This fraudulent activity was enabled by certain bank officials who disbursed loans to 49 applicants. The officials reported that Rs. 8 million had already been recovered through legal procedures, and efforts were underway to retrieve the remaining amount. The COPE expressed concern about the delay in holding the responsible officials accountable and recovering the lost funds, considering that six years had elapsed since the incident. As a result, SMIB officials were instructed to submit a report on this matter within two weeks.
Additionally, the COPE noted that ten branches of SMIB had recorded higher non-performing loan rates, surpassing the bank’s average non-performing loan rate. In response, officials explained that due to the predominantly middle- and low-income customer base of the bank, they had provided grace periods for debt repayment, given the prevailing economic challenges. The COPE, understanding this context, provided instructions for necessary measures to be taken in this regard.