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e-Con e-News 21-27 September 2025

England’s Hongkong & Shanghai Banking Corporation (HSBC) this week sold certain retail ‘assets’ in Sri Lanka to the Nations Trust Bank (NTB) for Rs18billion – so, the merchant media tells us. HSBC claims this ‘exit from retail is part of a global retrenchment that includes several Asian markets’ and ‘reflects a wider shift in global finance as multinational banks scale back.’ HSBC’s origins can be traced to England’s trading of opium grown in India & imposed on China through war. Many of England’s leading agency houses, from 19^th century Ceylon to this day in Sri Lanka, have been linked to HSBC & England’s voracious opium business…

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It was only in August that HSBC was ‘recognized as the Best International Bank in Sri Lanka by Euromoney for the 2^nd year in a row’. They earlier won ‘the 2025 FinanceAsia award for the Best International Bank in SL for the 8^th time’. We know these awards & attendant ceremonies and hoopla are fake. Yet if true, why are such worldly behemoths ‘scaling back’? Perhaps it was to hype their share prices. ‘The proposed acquisition covers ‘HSBC Sri Lanka’s retail banking business including premium banking customers, credit cards, retail loans and accounts of approximately 200,000 customers!’ And from where did NTB get this Rs18bn, in a supposedly ‘bankrupt’ economy? NTB claims the transaction ‘will be funded by internally generated funds.’ Yet, how does all this recall and mirror the colonial role played by Indian capital, as intermediaries for the imperialist exploitation of Sri Lanka?

     2025 marks the centennial of the crash in 1925 of a Nattukottai Chettiar moneylender in Colombo, which led to a larger banking crisis in the country, previewing the onset worldwide of the so-called Great Depression of 1929, which accelerated the march to Japan’s invasion of China in 1931, and England’s World War 2. After the 1925 Chettiar crash, the English banks stopped lending money to Chettiar ‘firms’, who then began demanding repayment of loans from ‘Ceylonese clientele’, who were themselves in financial straits. The ‘Ceylonese’ then defaulted and lost their properties, resulting in an intense anti-Chettiar campaign, accompanied by an outcry against toddy & arrack ‘renters’, who were also financed by Chettiar lenders

     The Chettiar moneylenders were middlemen between the English banks and local people, because English banks refused to lend directly to Ceylonese. The crash inspired demands for a local bank, which resulted in the English creation in 1934 of the Ceylon Banking Commission (CBC, headed by Indian Parsi banker Sir Sorabji Nusserwanji Pochkhanawala, a founder of the Central Bank of India). The CBC supposedly ‘favored a policy of industrialization’ and recommended the formation of the state-sponsored Bank of Ceylon (1938). The state-sponsored Bank of Ceylon, & later Peoples’ Bank, would however be sabotaged from operating as development banks, which were supposed to invest in modern production.

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The 1922 Industries Commission had baldly declared: ‘By reason of natural resources Ceylon is destined to be primarily an agricultural country.’ Meanwhile, England’s Donoughmore Constitution, 1931-47, retained English control of war-making & external affairs, public service, finance & justice in Ceylon. It was a harbinger of the restrictions that would be retained after ‘Soulbury independence’ in 1948, that would impede & sabotage any attempts to industrially modernize the economy.

     The architects of such stunted independence had to act ignorant of the excellent example the USSR was at that time, showing throughout the 1920-40s, how a country could modernize in a short time. The USSR had learned the lessons from the examples provided by the colonies of ‘new settlement’ like the USA, Canada, Australia, etc, minus the stealing of lands from indigenous peoples. Yet, the whites’ genocidal practices were solely projected falsely onto the USSR, to tarnish its industrial achievements.

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‘If money comes into the world

with a congenital blood-stain on one cheek,

capital comes dripping from head to foot,

from every pore, with blood and dirt.’

– Karl Marx, Capital

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• The 19^thC English prohibition of chena cultivation, had taken place midst mass murder in Lanka, and the wholesale robbery & sale of chena lands & forests to expand the plantations, with the aid of an indentured system of unfree immigrant labor from India. Chena, also known as ‘swidden’, was given the English moniker ‘slash&burn‘ in Ceylon, to demonize an ancient practice, which had enabled the Sinhala cultivator to grow cash crops & earn cash, rather than just barter their harvests for imported industrial goods. The prohibition on chena then led to a ‘liquidity crisis in the village’. These changes in production relations soon resulted in ‘the rise of merchant-cum-usurer class in the agrarian system’. This alien class fraction provided loans to the peasantry within and between the harvesting periods of paddy, in exchange for a greater share of the total harvest. This created the socioeconomic space necessary for this usurer-cum-merchant class – mostly ‘Chettiars’ by the 20^thC – to ascend in the English period.

     The import of rice to Sri Lanka from Burma had been monopolized by Chettiar & other Indian traders who controlled 40% of Burma’s imports and 60% of exports. These regional Chettiar bankers later became the reason for the Bank of Ceylon to be set up, because the English banks would only lend to local people through them. Such crucial linkages explain why state & commercial banks simply refuse to invest in modern (machine-building) production. These Chettiar bankers grew to also control Tamil political parties as well as other politicians, and such media as MTV, News1^st, etc.

     The Chettiar crisis led, in 1927, to Mahatma Gandhi’s tour of Colombo, Kandy & Jaffna, organized by the Nagarathar Society of Colombo – powerful Nattukottai Chettiar financiers. These businessmen included wealthy recruiters of unfree labor from India.

     ee earlier (17 July 2021) discussed the link between the first English (& gay) governor of colonial Ceylon in the 18-19^th centuries and the resounding crash of England’s Arbuthnot & Co in 1906. Funded by Nagarathar Chettiar capital, the Indian Bank (IB) was set up by Venkatarama Iyer Krishnaswamy. He had purportedly sued Arbuthnot, and ensured the principal English partner of the firm, Sir George Arbuthnot was imprisoned. The English then made Krishnaswamy a judge of the Madras High Court in 1909 and a member of the Executive Council of the Madras Governor. The IB then spread through Sri Lanka, Myanmar, Singapore, and Southeast Asia.

     In 1932 the India Bank opened a branch in Colombo. It opened its 2^nd Ceylon branch in 1935 in Jaffna, and later opened a branch in Rangoon, Burma (Yangon, Myanmar). The Burmese government nationalized all foreign banks, including IB’s branch, in 1963. In 1969 the Government of India nationalized 14 top banks, including IB. Assassination & sabotage would prevent Sri Lanka from making any such moves!  In July 1983 ‘rioters’ burned the Indian Overseas Bank Branch in Colombo, but the Indian Bank Branch, miraculously ‘escaped unscathed’, as did the gold shops of Sea Street.

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• Merchant- & moneylender-dominated media in Sri Lanka (see ee Finance, HSBC to exit retail banking in SL) claims HSBC’s ‘retail’ sale to NTB, and this ‘global rentrenchment’ by multinational banks, ‘creates space for local institutions to consolidate’. What on earth could this mean? Concentrate? Create further monopolies? They compare the sale to Singapore’s DBS Bank, which ‘has emerged as the dominant player; in Sri Lanka, local banks are now filling the same role’. Really? Apparently, ‘on the corporate side’, the NTB ‘continues to prioritise exporters, value-added manufacturers, and financial institutions.’ This itself shows, there is absolutely no compare with Singapore.

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• DBS (Development Bank of Singapore), the ‘largest bank in Southeast Asia by assets’, is controlled by state-owned Temasek Holdings, Singapore’s 2^nd-largest sovereign wealth fund after GIC (Government of Singapore Investment Corporation, which manages the country’s foreign reserves, & is funded by the Monetary Authority of Singapore/MAS, their central bank & monetary authority). Singapore is a modern industrial city-state. They invest in modern high-technology production, ie, machine-making machineries. They compulsorily retain 20% of workers’ wages which are placed in a savings fund. They prevent ‘sweatshops’ from operating in their country, and demand they pay their workers high wages. How can they compare with Sri Lanka’s banks, especially the so-called private commercial banks which are fronts for foreign multinationals? And why are media-promoted economists (especially from ‘rule-of-law’ Singapore, where former central-banker-on-the-run Royal College’s Arjuna Mahendran is supposedly hiding!) promoting the so-called ‘independence’ of the Central Bank from political, ie, elected, oversight?

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Central banks were never neutral bodies

designed to provide expert advice & decisions

on controlling interest rate, money supply &

affecting the wider economy. Central banks were

created as ‘lenders of last resort’ to ensure that

the banking sector did not implode & would

continue to ‘lubricate’ the capitalist economy.

In the post-1945 period, they morphed into agencies

for ‘managing the economy’ (with little success);

& the neoliberal period saw a drive to establish

their ‘independence’ from any Leftist governments

in the interests of finance capital. – M Roberts,

ee Economists, Immigration & the World Order

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Another Royal College hitman & former Central Bank governor, Indrajit Coomaraswamy was this week inducted as a Fellow of National Academy of Sciences. There he repeated his tired, utterly false & unscientific mantra about the independence of the Central Bank and that ‘at the time of independence Sri Lanka was second to Japan on almost any socioeconomic indicator in Asia;’ and that Sri Lanka has ‘very toxic combination of populist politics on the one hand and a deeply entrenched entitlement culture amongst the people’. Again we ask, really? Is it ‘populism’ & ‘entitlement’ that has retained the colonial import-export plantation fraud? 

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• Fair Facts – John Keells Holdings is Nation Trust Bank (NTB)’s largest shareholder with a 56.4% stake. Keells recently invested in a casino! – City of Dreams! Keells’ largest shareholder is HWIC Asia Fund, a subsidiary of ‘Canadian company’ Fairfax Financial Holdings. A major financier of car imports, Fairfax, along with other foreign funds (World Bank’s International Finance Corporation – IFC, Norways Norges, England’s Aberdeen, & USA’s Templeton) and foreign HNIs (High-Net-Worth Individuals, Mark Mobius etc) are big investors in the ‘rigged’ (according to UNP leader Ranil Wickremesinghe) Colombo S.tock Exchange (CSE). Fairfax’s frontman Prem Watsa visited their Fairfirst Insurance offices in August this year to welcome Sri Lanka’s ‘remarkable recovery’ after opening the country to further car imports. Prabhat Patnaik, in a recent essay ‘Is India Heading for Foreign Ownership of Banks?’ (see ee Economists) notes that the Reserve Bank of India (RBI), despite having a limit of 15% on ownership by non-residents of the equity of an Indian bank, has ignored the 2018 purchase by the Mauritius-based Holding Company of the Canadian company Fairfax of a 51% equity in the Catholic Syrian Bank of Kerala. So exactly who is Prem Watsa a laundering front for?

     Keells & World Bank’s International Finance Corporation are also big investors in the Commercial Bank of Ceylon Group, comprising Sri Lanka’s ‘largest private sector bank’, and called the ‘Best Bank in Sri Lanka’ by the US-based Global Finance magazine. Washington-based World Bank’s IFC in 2023 gave a US$400million swap facility to the Commercial Bank of Ceylon, Sampath Bank & Nations Trust Bank, ‘to help import food, medicine & fertilizers.’ No wonder they vehemently oppose local production of these goods, and their merchant media, corporate & so-called ‘social’ media raised a ruckus over such ‘import-substitution’ in 2022, leading to the ‘aragalaya’ (see ee Quotes, Exploding Gas Cylinders?).

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• Multilateral lenders, such as Asian Development Bank (ADB) [& the World Bank etc ee may add!] are ‘forcing cooperatives & government-led credit programs to be weakened while promoting the commercialisation of microfinance‘. So says ‘ADB Loan Condition Trumps Consultation with Communities Affected by Microfinance’, by the Ekabaddha Praja Sanwardhana Kantha Maha Sangamaya, the Collective of Women Victimised by Microfinance and the Uva Vellassa Kantha Sangamaya (see ee Focus). These well-advertised institutions are ‘as much to blame for the microfinance crisis in Sri Lanka’, which the Non-banking Finance division at the Central Bank claims to be unaware, The ‘independent’ Central Bank is in fact refusing to regulate large finance companies. Many of these finance companies are fronts for agents importing the industrial goods of imperialist countries.

     ‘Usury has been nurtured and reproduced by the household debt crisis caused by the profit-driven and extractive lending practices of big finance companies… Large finance companies, have contributed to and exacerbated the microfinance crisis.’

     This critique does not discuss the role played by intermediaries, just like the Chettiar bankers, between the multilaterals like the World Bank, and the commercial banks, which are fronts for so-called Development Agencies. Nor does it discuss the need for nationalizing these banks. The first priority, as Lenin noted during the 1917 Russian Revolution, a lesson learned from the failure of the 1871 short-lived & pathbreaking Paris Commune, is to imprison these ‘bankers’ who if not held responsible, will finance mayhem again & counter-revolution.

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‘Bank loans to NBFCs & MFIs are now

counted as part of priority sector lending.

The basic purpose of bank nationalisation,

which among others, was to make bank

finance directly available to marginal borrowers

in sectors like agriculture, small industries &

small businesses, bypassing all intermediaries,

has been undermined.’ (see ee Economists, Patnaik)

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Meanwhile, rather than nationalizing banks, the Economic Development Deputy Minister AJ Fernando is dreaming of using the Stock Market to shakedown ‘domestic savings’. He says such savings remain are scattered & fragmented, limiting their impact on development. ‘Scattered, insignificant capital cannot make a big push for economic development. We need to pull them together, and the stock market is the platform for that.’ (see ee Economists, Govt says capital market reforms critical)

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• This week saw the Sri Lanka Banks’ Association (SLBA) submit proposals for the 2026 budget complain about  ‘Excessive taxation, currently at 53% for domestic banks & 65% for foreign banks’ They claim it’s ‘a barrier to competitiveness & capital formation’. Really? What kind of capital? Usurer? Mercantile? Industrial? ‘A fairer regime… would allow banks to direct resources towards lending for critical infrastructure & priority sectors.’ What are the priorities for the SLBA? Only their lame history can tell us. The SLBA meanwhile wants a level playing field, ‘by applying VAT on global digital services, such as Google, Meta, PayPal.’ They also want to remove cash, and advance digital transactions by capping large cash payments and mandating electronic settlement of supplier, tax and utility bills.’ (see ee Economists, Budget 2026: SLBA present proposals)

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• SBD de Silva constantly pinpointed the media’s incessant call for investment, ‘FDI! FDI!’ and always asked, ‘Investment for what?’ To splash on more luxury imports? ee continues Chapter 2 of SBD de Silva’s 1982 classic, The Political Economy of Underdevelopment (PEU). SBD compared ‘investment patterns in the settler & nonsettler colonies, and the resulting economic underdevelopment in the latter’. The last ee described the ‘deviant cases‘ that did not readily fit SBD’s settler/nonsettler model, where he pointed out that the economic structures that emerged in the underdeveloped countries seem to be connected with the type of colony which they represented.

     SBD’s Chapter 2 seeks to explain ‘the relative economic viability of the settler colonies, & the politico-economic impulses to their development’. He critiqued ‘the perceptions of a few earlier writers’ as to the ‘developmental significance of the settler/nonsettler distinction’. Countries with settlers, both ‘European & alien Asian’ were more ‘intensely colonized’ than those with expatriates & (non-resident) investors based in metropolitan centers. He described the greater industrial &/or urban growth and diversified agriculture in settler colonies, whose internally oriented development involved reinvestment of profits, with production for local or regional markets. These settler communities mimicked the socio-political structure of the imperialist homelands, and had a far greater social heterogeneity, particularly a white working class. He exposed the racist claim that only Black people can ‘face the sun’, and suggests that the non-presence of settlers in certain countries was actually due to the strong resistance to white intrusion by Indian & Chinese merchants. SBD also suggested:

The eclipse of the resident investor

& the growth of absentee capital

are connected with the growth of

corporate ventures financed

by the capital market in England.

Absentee ownership in the colonies, the foundation of the company form of organization, began after 1880 when metropolitan capital became ‘increasingly mobile ‘, enabled by new telegraphic communication and by advances in financial machineries & institutions‘, which ‘superseded the small promoter’ as a channel for investment funds.

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• This ee Focus also continues Gustavus Myers’ History of Tammany Hall, which exposes the New York ‘charity’ that was a front for the political machinations of the USA’s foremost municipality. Here we find how intermittent ‘commissions’ and investigations into corruption, including movements for ‘good governance’ (yahapalanya!), rather than changing the capitalist structure of a rising imperialist power, result only in further concentration and monopoly entrenched in big bosses. Here we learn how fraudulent ‘democratic’ elections, municipal and national, are enabled through the ‘active cooperation and connivance’ of the police, who get their jobs via ‘forced contributions’ to the ‘charity’. Corporations, real-estate, roads & railways, also pay large sums to maintain their control. Myers spends little ink on fully explaining the uppermost role of these corporations in the game, with only faint references to the role of public displays of ‘charity’ to the ‘poor’ and the ‘Cuban cause’, behind the ‘millions’ derived from rents, fees, fines, interest, assessments, bond sales, premiums, contract juggling, legislative ‘goods’, in order to control of an army of 60,000 employees…

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• Barclays Bank Pulls out of Financing Israel’s Genocide? England Barclay’s Bank was created out of the compensation paid by the Rothschild bankers, to the English slave owners to abolish the incessantly system of enslaving Africans as chattel, and its replacement with indentured enslavement mainly of people from Asia (‘coolies’). Apparently, ‘the question is no longer about profit margins or Zionist enthusiasm in the boardroom – it’s about reputational survival. Barclays, a bellwether of the English establishment and Anglo-American banking, is voting with its balance sheet, and its verdict is a blow to Israel’s financial capacity to win its long war against the Palestinians, the Arabs, Iran and Turkey.’ (see ee Sovereignty, John Helmer)

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• Regarding this week’s reader’s comment on ee’s discussion of the origins of Thurstan College: In 1859, Anglican missionary A J Thurstan had set up a ‘private technical school on former cinnamon estate (later, Colombo 7’s Cinnamon Gardens). Kumari Jayawardena‘s The Rise of the Labor Movement in Ceylon (1972) recalls the school, thus: ‘It is not possible to precisely determine when the first strike occurred in Ceylon, for stoppages of work by groups of unorganized workers were not unknown in the 19^th century. For example, around 1860 the carpenters & teachers at the Industrial School run by Mr Thurstan went on strike because they had not received recognition in the form of ‘native rank’ which they had expected from the government.’ In 1884, the English colonial government had set up an agricultural school set up where the technical school had been, ‘to promote the cinnamon industry’ (Wiki). As with all such mistaken uses of the term ‘industry’, it is unclear what exactly was being taught there: was it for research into the growing of cinnamon, or for processing?

     What may be of interest is that the 1884 setting up of an agricultural school, in the aftermath of the devastation caused by the coffee blight, took place midst the failure of the City of Glasgow Bank. London’s Oriental Banking Corporation (OBC, main bank in India & China), one of colonial Ceylon’s early ventures in banking, actually a ‘Scottish concern’, was then closed down and most coffee planters ruined. Food riots almost took place. Armed force prevented depositors and ‘note holders’ from battering down doors: governor then guaranteed payment of bank notes. OBC was then reconstituted as New Oriental Bank Corporation, and OBC Badulla manager Harley Lowe began the Bank of Uva.’  In 1910, the agricultural school closed down…

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Contents:

HSBC Withdraws from Retail Banking in Sri Lanka