A meeting was held between President Ranil Wickremesinghe and visiting Indian Minister of External Affairs – Dr. S. Jaishankar today, where it was agreed upon to implement a joint program between Sri Lanka and India.
During the meeting, many political, economic and social issues as well as investment matters between the two countries had been discussed at length.
During this discussion, special attention was paid to the debt-restructuring program in Sri Lanka which had received a positive response from the Indian government, the Presidential Media Division (PMD) says.
India and Sri Lanka signed bilateral documents for the upward revision of ceilings prescribed in the High Impact Community Development Project (HICDP) framework agreement today. The agreement, first signed in May 2005, has doubled the individual project limit from Rs 300 to 600 million. The total HICDP funds will be doubled from Rs 5 billion 10 billion.
The President and Dr. Jaishankar also virtually declared open the Academy for Kandyan dancing in close proximity to the Dalada Maligawa in Kandy today, for which Indian PM – Narendra Modi laid the foundation stone during his visit in 2017. Further, 300 completed houses in Galle, Kandy and Nuwara Eliya (100 each) under Indian assistance were also declared open virtually.
The complete media release by the PMD is as follows :
During a meeting held between President Ranil Wickremesinghe and India’s Minister of External Affairs Dr S. Jaishankar, it was agreed upon to implement a joint program between Sri Lanka and India.
President Ranil Wickremesinghe warmly welcomed the Indian External Affairs Minister at the Presidential Secretariat this morning (20) where the duo engaged in cordial discussions.
Prior to the official meeting, President Wickremesinghe hosted the visiting Indian External Affairs Minister Dr Jaishankar for breakfast and tea at his official residence at Paget Road, Colombo.
In addition, in the official meeting held between the President and Indian Foreign Minister Dr S. Jaishankar, many political, economic and social issues as well as investment matters between the two countries were discussed at length.
During this discussion, special attention was paid to the debt-restructuring program in Sri Lanka which had received a positive response from the Indian government.
The Indian External Affairs Minister recalled that in 1991, during the tenure of former Indian Prime Minister P.V. Narasimha Rao, India had to face an economic crisis similar to what Sri Lanka is currently facing. He added that the Indian Government overcame the crisis by pledging the government’s gold reserves.
Therefore, Dr Jaishankar said that India has a good understanding of the situation Sri Lanka is currently facing and said that the Indian government will provide all possible support to solve the current economic problems faced by Sri Lanka.
The bilateral agreement related to raising the limit of the High Impact Community Development Project (HICDP) implemented in Sri Lanka with the support of the Government of India was also signed during the meeting.
The Secretary to the Ministry of Finance, Mr Mahinda Siriwardena, signed the agreement on behalf of Sri Lanka and the Indian High Commissioner to Sri Lanka HE Gopal Baglay signed on behalf of India.
This agreement guides many community development projects in Sri Lanka with the support of the Government of India.
This agreement related to community development projects in Sri Lanka was signed in May 2005. Its project limit was Rs. 300 million, which will now be doubled to Rs. 600 million by the agreement signed today.
Meanwhile, during Prime Minister Narendra Modi’s visit to Sri Lanka in 2017, the foundation stone was laid for the construction of an Academy for Kandyan dancing as a gift given to Sri Lanka by the Indian Government and its people. The Indian Foreign Minister also virtually declared open the academy, which was built near the historical Dalada Maligawa in Kandy.
The handing over of 300 completed houses in Galle, Kandy and Nuwara Eliya – (100 houses each) under the housing project implemented in Sri Lanka with the support of the Indian Government, was also done virtually by the President and the Indian External Affairs Minister.
In this project of 60,000 houses, 50,000 houses have been completed. The third phase of the project of 400 houses for the people of the upcountry estate sector is currently underway and over 3,300 houses built under it have already been completed and are ready to be handed over to the beneficiaries.
The handing over of houses built in Anuradhapura and Badulla districts under the “Model Village Housing Program” implemented with the support of the Government of India for low-income families in Sri Lanka, were also symbolically handed over to the beneficiaries.
Senior Advisor to the President on National Security and Presidential Chief of Staff Mr Sagala Ratnayake, President’s Secretary Mr Saman Ekanayake and other officials and a special Indian delegation attended the discussion.
A controversial real estate financing model, ‘PrimeMax’, introduced by Prime Lands for apartment buyers, is allegedly putting both buyers and HNB Finance depositors at significant financial risk.
This is because Prime Lands, which holds a 38% stake in HNB Finance, is leveraging its shareholder power to aggressively direct public funds into high-risk, speculative real estate loans.
Experts warn that this move not only violates CBSL’s risk diversification regulations but also exposes HNB Finance to significant liquidity risks.
Traditionally, HNB Finance operates in the microfinance sector, which relies on fast cash flow and frequent repayments.
However, this real estate loan model contradicts the principles of microfinance by front-loading funds into high-value condominium projects and locking capital into long-term, high-value loans with slow repayment cycles. This shift undermines the company’s liquidity, putting both the financial stability of HNB Finance and the security of its depositors’ funds at significant risk.
How the ‘PrimeMax’ 0.5% payment scheme works:
10% Down Payment: Buyers pay only 10% of the total property value upfront.
47.5% Bank Loan: HNB Finance funds nearly half of the property value through a loan.
Interest-Only Payments for 3 Years: Buyers pay just 0.5% per month, primarily covering interest with minimal reduction in the principal.
Additional 15% Paid as Interest: Over the 3-year period, buyers will have paid an additional 15% of the sale value as interest.
Outstanding Balance After 3 Years: After the 3-year period, approximately 75% of the total property value remains unpaid. This balance consists of the remaining loan amount owed to HNB Finance, along with the outstanding balance owed to Prime Lands.
Financial trap for apartment buyers
Prime Lands markets this scheme as a flexible investment opportunity, but economic experts say it is actually a debt trap that locks buyers into long-term loans.
Crippling debt even after 3 years : With more than 75% of the property price left unpaid, buyers will be burdened with a massive financial liability. This overwhelming debt will make it nearly impossible to secure refinancing or sell the property at a reasonable price.Even after 03 years, buyers will still owe roughly 75% of the property’s price, which makes refinancing or reselling at fair value very difficult.
The buyback & resale scam : Meanwhile, the promised opportunity to resell at a higher value is highly speculative and unreliable. Project delays, unfavorable market conditions, and low demand can make reselling impossible, leaving buyers stuck in a property they can’t sell.
With these limited options, they may be forced into the buyback scheme-often at a price far below market value, resulting in significant financial losses rather than the anticipated profits.
Threats to HNB finance depositors
This flawed financing structure does not only impact buyers – it directly threatens the financial stability of HNB Finance customers and depositors:
Liquidity Challenges: With loan repayments delayed, HNB Finance may struggle to maintain its financial commitments, putting depositors’ funds at risk.
Risk of Defaults: If apartment buyers default due to high outstanding balances, HNB Finance could face serious financial losses, ultimately jeopardizing its depositors’ security.
Regulatory Violations: The Central Bank of Sri Lanka enforces strict lending policies for finance companies. This scheme raises concerns about compliance, as it prioritizes aggressive sales over responsible lending practices.The shift from microfinance to large-scale property lending could also push HNB Finance beyond regulatory limits for exposure to a single sector.
CBSL must intervene to protect public funds and depositors
The Central Bank of Sri Lanka (CBSL) enforces strict Risk Diversification Regulations for licensed finance companies to prevent excessive exposure to any single sector, ensuring depositor safety and financial stability.
However, HNB Finance PLC is dangerously violating this principle by diverting a significant portion of its funds into speculative real estate loans under the Prime Lands 0.5% scheme.
Unlike commercial banks, finance companies rely heavily on public deposits, making it crucial for them to maintain liquidity and prudent lending practices.
By over-lending to real estate, HNB Finance not only concentrates risk in a volatile sector but also compromises depositor funds, increasing the chances of liquidity shortfalls and defaults.
If this reckless lending continues, HNB Finance risks breaching CBSL’s sectoral exposure limits, leading to severe financial instability.
A controversial real estate financing model, ‘PrimeMax’, introduced by Prime Lands for apartment buyers, is allegedly putting both buyers and HNB Finance depositors at significant financial risk.
This is because Prime Lands, which holds a 38% stake in HNB Finance, is leveraging its shareholder power to aggressively direct public funds into high-risk, speculative real estate loans.
Experts warn that this move not only violates CBSL’s risk diversification regulations but also exposes HNB Finance to significant liquidity risks.
Traditionally, HNB Finance operates in the microfinance sector, which relies on fast cash flow and frequent repayments.
However, this real estate loan model contradicts the principles of microfinance by front-loading funds into high-value condominium projects and locking capital into long-term, high-value loans with slow repayment cycles. This shift undermines the company’s liquidity, putting both the financial stability of HNB Finance and the security of its depositors’ funds at significant risk.
How the ‘PrimeMax’ 0.5% payment scheme works:
10% Down Payment: Buyers pay only 10% of the total property value upfront.
47.5% Bank Loan: HNB Finance funds nearly half of the property value through a loan.
Interest-Only Payments for 3 Years: Buyers pay just 0.5% per month, primarily covering interest with minimal reduction in the principal.
Additional 15% Paid as Interest: Over the 3-year period, buyers will have paid an additional 15% of the sale value as interest.
Outstanding Balance After 3 Years: After the 3-year period, approximately 75% of the total property value remains unpaid. This balance consists of the remaining loan amount owed to HNB Finance, along with the outstanding balance owed to Prime Lands.
Financial trap for apartment buyers
Prime Lands markets this scheme as a flexible investment opportunity, but economic experts say it is actually a debt trap that locks buyers into long-term loans.
Crippling debt even after 3 years : With more than 75% of the property price left unpaid, buyers will be burdened with a massive financial liability. This overwhelming debt will make it nearly impossible to secure refinancing or sell the property at a reasonable price.Even after 03 years, buyers will still owe roughly 75% of the property’s price, which makes refinancing or reselling at fair value very difficult.
The buyback & resale scam : Meanwhile, the promised opportunity to resell at a higher value is highly speculative and unreliable. Project delays, unfavorable market conditions, and low demand can make reselling impossible, leaving buyers stuck in a property they can’t sell.
With these limited options, they may be forced into the buyback scheme-often at a price far below market value, resulting in significant financial losses rather than the anticipated profits.
Threats to HNB finance depositors
This flawed financing structure does not only impact buyers – it directly threatens the financial stability of HNB Finance customers and depositors:
Liquidity Challenges: With loan repayments delayed, HNB Finance may struggle to maintain its financial commitments, putting depositors’ funds at risk.
Risk of Defaults: If apartment buyers default due to high outstanding balances, HNB Finance could face serious financial losses, ultimately jeopardizing its depositors’ security.
Regulatory Violations: The Central Bank of Sri Lanka enforces strict lending policies for finance companies. This scheme raises concerns about compliance, as it prioritizes aggressive sales over responsible lending practices.The shift from microfinance to large-scale property lending could also push HNB Finance beyond regulatory limits for exposure to a single sector.
CBSL must intervene to protect public funds and depositors
The Central Bank of Sri Lanka (CBSL) enforces strict Risk Diversification Regulations for licensed finance companies to prevent excessive exposure to any single sector, ensuring depositor safety and financial stability.
However, HNB Finance PLC is dangerously violating this principle by diverting a significant portion of its funds into speculative real estate loans under the Prime Lands 0.5% scheme.
Unlike commercial banks, finance companies rely heavily on public deposits, making it crucial for them to maintain liquidity and prudent lending practices.
By over-lending to real estate, HNB Finance not only concentrates risk in a volatile sector but also compromises depositor funds, increasing the chances of liquidity shortfalls and defaults.
If this reckless lending continues, HNB Finance risks breaching CBSL’s sectoral exposure limits, leading to severe financial instability.
The Committee on High Posts, which met recently in the Parliament under the patronage of the Prime Minister – Dr. Harini Amarasuriya, has given its approval for the appointment of 04 secretaries for ministries.
Accordingly, the following appointments have been approved :
Prof. K. T. M. Udayanga Hemapala – Secretary to the Ministry of Energy K.M.G.S.N. Kaluwewa – Secretary to the Ministry of Education, Higher Education, and Vocational Education S.M. Piyatissa – Secretary to the Ministry of Labor K.D.R. Olga – Secretary to the Ministry of Women and Child Affairs