The Monetary Board of the Central Bank of Sri Lanka at its meeting held on 01.01.2018, having considered the weak financial performances of the ETI Finance Ltd. (ETIF) and Swarnamahal Financial Services PLC (SFSP) with a view safeguard the interests of the depositors and other creditors of the two companies, and to ensure safety and soundness of the financial system, decided to take several regulatory actions, as a temporary measure, under the provisions of the Finance Business Act No. 42 of 2011, with immediate effect.
The measures included appointing a panel to manage the affairs of both companies, restricting the withdrawal of maturing deposits and renew such deposits for a period of six months and payment of interest due for deposits as per agreed terms and conditions.
The announcement, issued as a press release also urged depositors to kindly ‘cooperate with the Central Bank in its effort to ensure the stability of the ETIF and SFSP.’
Speaking further to ’Sri Lanka Mirror’, the ETI spokesperson said the Central Bank had stepped in as it could have had a direct impact on the country’s economy if this situation prevailed.
Gold price dip
Noting that the main business of ETI Finance is lending money on gold securities, the spokesperson further said that the issue was due to the drop in gold prices in 2012.
He added that not all money deposited by their customers are kept as cash but are invested in several fields to earn income as loan interest.
He further said that upto yesterday all withdrawals were met with while interest was paid on time.
The asset sale was to safeguard the interest of depositors by investing Rs. 12 billion on ETI (US75m) and therefore closing the gap between the assets and liabilities.
However, ‘Sri Lanka Mirror’ learns that the stage has been set for a foreign investment and the Central Bank is in the process of facilitating this in accordance with prevailing regulations.