National Savings Bank has celebrated her 40th anniversary on 16th March 2012. Although formed by statute in 1972, the Bank’s origin trace back to 1832. With the establishment of Post Office Savings Bank in 1885 the deposits and withdrawals were routed smoothly through the island wide Postal network. On 16th March 1972, the National Savings Bank commenced its operations by an Act of Parliament to reach the goal of effectively channeling the idle money lying in every corner of the island towards the development process of the country. The National Savings Movement, Ceylon Savings Bank and the Savings Certificates Section of the Postmaster General’s Department came under a one roof with the formation of the National Savings Bank. Even before its inception as a Bank, it was a financial institution for the little man of the country.
This article is not meant to describe the history of the NSB, but to discuss the tragedy it has to face due to a misconduct of few people in the driving seat of the Bank at present. For the last two weeks all the media, especially printed media is bombarded with the news of NSB’s controversial deal of purchasing shares of The Finance Company at an inflationary rate. The ill fated deal was worth Rs.390 Million and created a much chaos among the business community, opposition political parties and especially in the Colombo Stock Exchange. Economists, Financial Analytic and politicians criticized the deal in every possible way providing all the details about the transaction so that the business community and the people that have some sort of business mind have fully updated about the situation.
But those economists and analytics have neglected the majority, which are the common people. The people who have built up the assets of the NSB by saving Cent by Cent and Rupee by Rupee. It is the NSB the bank of the little people who has inculcated the savings habit among the people. The burning questions of them not answered were
- Will this ill fated transaction lead the Bank to bankruptcy?
- Will this become another Pramuka Bank scenario?
- What will happen to our money deposited at NSB?
- Is it safe to keep our deposits there?
The NSB itself and even the Central Bank fail to answer those questions to date. The media itself unable to educate the general public about the same. The main objective of this article is to answer those burning issues.
The NSB has an asset base of over Rs. 400 Billion and a deposit base of Over Rs.411Billion, the third largest bank in term of deposit base and forth largest bank in term of asset base in Sri Lanka. NSB’s annual average deposit mobilization is over Rs.25 Billion which means it mobilized over Rs.2 Billion per month. The value of controversial deal was Rs.390 Million which is not a considerable amount when compare with the deposit base. Being a licensed specialized bank, NSB has to invest minimum of 60% of its deposits mobilized in Government Securities which carry zero risk. Another large amount grant as House & Property Loans, Pawning and Loans against deposits which again have minimum risk. The Bank invests relatively a small percentage in dealing securities which consider as invest in shares ( The NSB – TFC deal was also comes under this category). Therefore NSB received the Fitch rating of ‘AAA’(lka) for the ninth consecutive year in 2011/2012 and also was the first Sri Lankan bank to clinch the coveted ‘AAA’ rating. And last but not least your money with NSB bears the 100% Government security, the ultimate protection one could ever get.
So with the Savings giant your money is 100% secure and there is no risk of bankruptcy whatsoever. NSB recorded a pre Tax profit of Rs.8.9 Billion for the year ended 2011. The huge chaos created in the business field was due to the nature of the ill fated deal. Authorities have taken actions to reversal the transaction but the damage has done for the goodwill of the Bank. An action of very few people has tarnished the image of the NSB. When the business tycoon Harry Jayawardane tried to get the owner ship of Sampath Bank, the bank staff, general public, priests and media were get-together to chase the dirty Harry. Now it is time to help the NSB to overcome this tragedy so come forward and show your loyalty and faith to the little man’s Bank.
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