Monetary Board decision made after companies failed to find investors
Companies not in a position to repay depositors by themselves
CB says 75% of ETI depositors can be paid in full from Insurance Fund
89% of Swarnamahal Financial Services depositors to be covered as well
Others will get Rs. 600,000 minimum payments with rest to be settled later
The Central Bank yesterday said business of ETI Finance Ltd. and Swarnamahal Financial Services PLC have been suspended and due to the companies not being able to repay depositors by themselves the depositor insurance scheme will cover the bulk of the payments.
The Monetary Board (MB) of the Central Bank of Sri Lanka (CBSL) at its meeting held on 10 July has decided to suspend business of ETI Finance Ltd. (ETIF) and Swarnamahal Financial Services PLC (SFSP), in terms of Section 31 of the Finance Business Act, No. 42 of 2011 (FBA) with effect from 13 July.
ETIF and SFSP have become insolvent due to various irregularities taken place, since 2011.
Due to the inability of Board of Directors and senior management of the respective companies to satisfactorily address the said deficiencies, the MB on 2 January 2018 issued Directions restricting the affairs of the companies and the powers of the Board of Directors of the two companies. A Panel of Management was also appointed by the MB to oversee the affairs of both companies.
During the subsequent period both companies were able to repay 30% of the deposits outstanding of each company through various measures. Even though the MB directed the Board of Directors of both companies to find suitable investors to revive the companies, no viable proposal materialised. Due to the inability to revive the companies successfully, the financial situation of both companies continued to deteriorate.
As a result, both ETIF and SFSP are currently not in a position to repay the deposits by themselves, irrespective of such deposits being matured.
However, with the suspension of business of ETIF and SFSP the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) of the CBSL will take necessary actions to pay compensation to the insured depositors under the applicable laws and regulations which would facilitate to settle:
1. 75% of the ETIF’s total depositors in full (28,554 depositors out of 38,111 total depositors), while each of the remaining 25% depositors (9,557 depositors) will also receive Rs. 600,000 as a part of their deposit amount, and
2. 89% of the SFSP’s total depositors in full (7,802 depositors out of 8,726 total depositors), while each of the remaining 11% depositors (924 depositors) will also receive Rs. 600,000 as a part of their deposit amount.
Further, the Director of the Department of Supervision of Non-Bank Financial Institutions of the CBSL decided to issue notices of suspension of Certificate of Registration of ETIF and SFSP as Registered Finance Leasing Establishments in terms of Section 9(1) of the Finance Leasing Act No. 56 of 2000 with effect from 13 July.
Accordingly, CBSL will inform further actions with respect to ETIF and SFSP in due course. Depositors or other interested parties can contact the following agencies to get more information about the cancellation and depositor payments.
Department of Supervision of Non-Bank Financial Institutions on suspension of business, 011 2477229, 011 2477504, This email address is being protected from spambots. You need JavaScript enabled to view it..
Resolution and Enforcement Department Payment of compensation under SLDILSS, 011 2398788, 011 2477261, This email address is being protected from spambots. You need JavaScript enabled to view it..
ETI Finance Ltd, all inquiries regarding deposits, advances and other facilities, 011 7534200 This email address is being protected from spambots. You need JavaScript enabled to view it.
Swarnamahal Financial Services PLC, 011 7534800, This email address is being protected from spambots. You need JavaScript enabled to view it..
(FT)