Sri Lanka, Jan. 10 -- Sri Lanka's economic recovery is threatened not only by past crises, but by a growing governance vacuum in how financial distress is resolved. Today, the fate of thousands of small and medium enterprises (SMEs)-many affected by terrorism, pandemics, economic collapse, and natural disasters-rests almost entirely with individual commercial banks. This concentration of power, exercised through unilateral parate action, poses serious risks to fairness, transparency, and long-term economic stability.

In no mature financial system should determinations of business viability, recovery options, and asset disposal be left solely to creditor institutions with direct financial interests. Yet in Sri Lanka, there is no independe...