The Central Bank (CB) is preparing guidelines to encourage a merger of the two development banks – NDB and DFCC – in line with the recent budget proposal, a top official said.“The two development banks could now take a cue from the budget proposals and commence discussions as to how they could carry out a merger,” CB Governor Ajith Nivard Cabraal told the Business Times.
He said the CB would provide some guidance on these matters. Another official said such guidelines are likely to be incorporated along with the CB Roadmap for 2014 to be unveiled on January 2. President Mahinda Rajapaksa said in his budget speech last month that development banks would be encouraged to merge.The official said this is still voluntary, adding that this is an extended thinking on the government’s budget proposal stipulating that any finance company which is a subsidiary of another holding company, and finance companies which are subsidiaries of banks, should be absorbed into the main company/bank operations.
He added that along with policy, the process and governance requirements will be spelled out in these guidelines in a bid to smoothen the transition.