It will be strengthening governance of all State Owned Banks (SOBs) – licensed commercial and specialised banks and strengthening the risk management architecture of SOBs.

These local banks need Rs. 1.4 trillion capital injection after bad loans increased to alarming proportions in the economic crisis and debt moratoriums as well as debt restructuring hit their balance sheets, it stated.

In order to protect retail investors from potential losses, the government will not seek to sell shares to retail investors in either of the banks (Bank of Ceylon/People’s Bank) until the bank has been profitable and in full compliance with all Central Bank prudential ratios for not less than two consecutive calendar years following the date of the cabinet decision, the finance ministry emphasised.

In any event, the government would only consider selling a minority stake in selected state banks, whilst the government retains the majority share ownership, as articulated in the 2024 budget speech, the finance ministry confirmed