JVP highlights crisis faced by ETI Finance, Swarnamahal Financial Services in P’ment

By Ashwin Hemmathagama – Our Lobby Correspondent

Non-banking financial institutions that have left their depositors stranded came under fire yesterday in Parliament with Chief Opposition Whip JVP MP Anura Dissanayake demanding that the Prime Minister clarify the present status of ETI Finance Ltd. and Swarnamahal Financial Services Plc, which are now under the direct supervision of the Central Bank of Sri Lanka (CBSL) due to liquidity issues.

With the management of both ETI Finance Ltd. (ETIF) and Swarnamahal Financial Services Plc (SFSP) being taken over by CBSL a few weeks ago, Rs. 36 billion worth of deposits of 35,300 customers is now at stake.  

“The depositors are unable to withdraw their money. They fear for the fate of their investments. But we are informed about some attempts to sell the EAP Group to a foreign institute. We demand to know the steps the CBSL took to protect the interests of the depositors of both ETIF and the SFSP. On the other, there is a barrier that prevents awarding a local television and radio network to a foreign entity. We would like to know the actions the Government has initiated to control this turmoil,” said MP Dissanayake.

Stating that non-banking financial institutions collapsed, leaving the depositors unable to recover their investments, the MP said: “In 2002 the collapse of Pramuka Savings and Development Bank initiated a trend. This was followed by the Sakvithy’s scam in 2008. The collapse of Golden Key in 2009 initiated the collapse of the entire Ceylinco Group, which was worth over Rs. 25 billion,” he said.

According to MP Dissanayake, the ripple effect of the Ceylinco Group collapse took down one of its key subsidiaries, the Finance and Guarantee Ltd., which changed hands under the supervision of the CBSL in order to safeguard the depositors. 

“Finance and Guarantee Ltd. was first given to the Merchant Bank and then to the Union Bank, which operated it as one of its subsidiaries under the name of UB Finance Company Ltd. As per the instructions of the CBSL, the depositors of the Finance and Guarantee Ltd. are supposed to receive their moneys from the UB Finance Company Ltd. The payback hasn’t been released for over five years. Even under the supervision of the CBSL, the collapse of financial institutions has not stopped. In 2013, CIFL was closed and over 4,000 depositors were in difficulty,” he added, seeing the Government reply with a payment plan and timeframe.