The government expects to pay the long standing loans that government departments, institutions and state ventures owe to state banks like the Bank of Ceylon, People’s Bank and the National Savings Bank so as to strengthen the banks’ balance sheets, learns AdaderanaBiz.

Meanwhile, the government is to buy the investments by SriLankan Airlines which have not paid any dividends expecting to relieve the banks from such long term investments

By end 2013 Sri Lanka’s eight state banks had contributed towards 49 percent of the assets in the entire banking sector with the deposits passing Rs. 02 trillion.

However, it has been revealed that due to non-performing loans in state banks increasing by 71 percent, their net profits had decreased by 25 percent by end 2013.

The main reason for this has been the increasing non-performance of gold backed loans due to the fall in gold prices in the world market.

Apart from these, it has been revealed that the state banks have attracted USD 1,250 million from the international market.