The Committee on Public Enterprises (COPE) has instructed the State Mortgage & Investment Bank (SMIB) to take required measures to overcome its administrative weaknesses and to be a competitive bank without completely deviating from its core objectives.

These recommendations were given when the officials of the Finance Ministry and the State Mortgage & Investment Bank were summoned before the COPE last week.

COPE chair MP Prof. Ranjith Bandara and the committee members have examined the bank’s audit report for the years 2020 and 2021 and looked into its current performance.

Attention was drawn to the delay in establishing a new core banking system as per the recommendations given in the previous COPE meeting. The SMIB officials, assuring that these works are in progress, promised to complete them by July 2024.

The committee emphasized the need to improve the operations at the commercial level to increase the assets of the bank and reach an advanced level. The COPE chair pointed out the importance of being close to the public as a competitive bank without completely deviating from the bank’s core objectives. Accordingly, the need to establish the bank’s brand among the public innovatively and attractively (rebranding) was emphasized.

Attention was also paid to recovering the loss of Rs. 68 million incurred by the SMIB in 2017 after some people obtained loans by submitting false documents. It was also revealed that this fraud was a result of giving the relevant loan amount to 49 loan applicants with the help of some officials of the bank.

Officials stated that Rs. 8 million has already been recovered in line with legal proceedings adding that legal measures have been initiated to obtain the remaining amount. The COPE highlighted that, although 6 years have elapsed since this incident, punishing the officials involved and recovering the lost money were delayed. Accordingly, the SMIB officials were instructed to submit a report on this within two weeks.

Additionally, attention was drawn to the fact that 10 branches have recorded a high non-performing loan rate, exceeding the average value of the non-performing loan rate of the SMIB. The officers pointed out that since the majority of the customers of this bank are middle- and low-income earners, they had to be given grace periods to pay their debts due to the prevailing economic situation. Accordingly, the COPE gave instructions to take necessary steps in this regard.