Financial sector safe from defunct finance companies

Saturday, 24 March 2018 00:44 - - {{hitsCtrl.values.hits}}

Govt. insists fallout from ETI Finance and Swarnamahal Financial Services has little impact on economy
Interest payments to be honoured, companies told to recover dues
Decision on radio and TV license with shareholders

By Ashwin Hemmathagama - Our Lobby Correspondent

ETI Finance Ltd. and Swarnamahal Financial Services PLC, which are now in distress, have little impact over the entire financial sector in the country, the Government confirmed to Parliament yesterday (23 March), requesting depositors to be less worried about their investments.

“These two companies, ETI Finance and Swarnamahal Financial Services, hold 0.13% of the entire financial services sector,” Minister of Public Enterprise and Kandy Development and Leader of the House of Parliament Lakshman Kiriella told Parliament.

According to the Government, a management committee has been appointed by the Monetary Board of the Central Bank of Sri Lanka (CBSL). “Withdrawal of the deposits reaching maturity will be controlled and their term would be extended by another six months. The interest due for every investment will be honoured as agreed and the transactions of the two companies will continue normally. To avoid any liquidity issues, the CBSL has also instructed the companies to recover their dues,” confirmed Minister Kiriella.

“These two companies have assets and those can be sold to honour the depositors if the need arises. Both the Central Bank and the Treasury are involved in this as mediators. We all want the institution to continue. The shareholders of these companies are now in consideration of selling non-income generating assets,” he added.

Rejecting the state involvement to sell or to assign the license for television and the radio broadcasting services issued to the EAP Group, which is also a part of the equation, the Government held that it is a decision of the shareholders.

Non-banking financial institutions leaving their depositors stranded came under fire in Parliament in January, with the Chief Opposition Whip, JVP MP Anura Dissanayake demanding that the Prime Minister clarify the present status of ETI Finance and Swarnamahal Financial Services, which are now under direct supervision of the Central Bank of Sri Lanka (CBSL) due to liquidity issues. With the management of both these companies taken over by CBSL in 2017, deposits worth Rs. 36 billion of 35,300 customers are now at stake.