Prime Minister Mahinda Rajapaksa directed the Central Bank yesterday to remove the practice that financial institutions acquire a surcharge on loans that their customers close before the repayment period.
Prime Minister Rajapaksa asked the officials to ensure that all financial institutions function according in this respect and refrain from charging any levy or surcharge on their borrowers, who would settle their bank and vehicle loan installments in full with their respective banks and finance companies before the scheduled loan repayment period.
The Prime Minister directed Central Bank officials to take necessary steps toward this at a Progress Review Meeting held at the Ministry of Finance. The discussion revealed that the financial institutions charge a 3 percent surcharge on the unpaid balance of their burrower’s loan. They sometimes refrain from charging that amount from him only upon a request made on his part.
The Prime Minister said that a general policy should prevail over acquiring such charges from the public.
“The individual financial institutions cannot have these functions executed and controlled by them at their discretion,” he said.
Prime Minister Rajapaksa instructed the Central Bank officials to remove the surcharge and added that all financial institutions should operate and consolidate their functions under the Central Bank’s oversight.
State Minister of Money, Capital Market and State Enterprise Reforms Ajith Nivard Cabraal said that acquiring this surcharge and placing it at the discretion of lending institutions could not be justified.
“It needs removing,” he said.
State Minister Shehan Semasinghe, Treasury Secretary S.R.Attygalle, Secretary to Prime Minister Gamini Senarath, and Central Bank Governor Prof. W.D.Lakshman participated in the meeting.