Swarnamahal Finance allowed to resume business for limited purpose and time
The Monetary Board of the Central Bank of Sri Lanka has made an order permitting Swarnamahal Financial Services PLC (SFSP) to resume business notionally for a limited purpose and limited time under the supervision of the panel of management appointed by the Monetary Board, subject to several strict conditions, in the public interest and in the interests of the depositors of the company, for a limited period of three months from January 13, 2021 to April 12, 2021.
Due to the various irregularities taken place and inability of the board of directors and the senior management of SFSP to address the resultant issues, the Monetary Board, on January 2, 2018, issued directions to the directors of the company and appointed a panel of management to oversee the affairs of the company.
Even though the Monetary Board directed the board of directors of SFSP to bring suitable investor(s) to revive the company, no viable investment proposal was available and the financial condition of the company continued to deteriorate.
In the meantime, 30 percent of SFSP deposits was repaid in 2018 and 2019.
Having considered the continuously deteriorating financial condition and non-availability of a viable revival plan, the Monetary Board decided to suspend the business of SFSP in terms of Section 31(1) of Finance Business Act, with effect from July 13, 2020.
During the period of suspension, payment of compensation for the insured depositors under the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) was commenced through the islandwide branches of People’s Bank.
By end-2020, a sum of Rs.834.1 million has been paid for 25 percent of the insured depositors out of the total of 9,660, up to a maximum of Rs.600,000 per insured depositor.
Such amount covers 84.9 percent of the Rs.982.9 million of eligible compensation under SLDILSS. SLDILSS will continue to pay compensation payment to the eligible depositors of SFSP, who have not received their compensation payment so far, up to a maximum of Rs.600,000 per depositor.
During the suspended period, SFSP was able to recover a significant amount of dues to the company, mainly through recoveries of gold loans that could be utilised to repay part of the remaining deposits of SFSP.
Further, the Central Bank of Sri Lanka (CBSL) has continuously received requests from the depositors as well as from the company to repay the remaining deposits out of the money so recovered.
The panel of management shall continue to manage the affairs of SFSP and oversee t he above-mentioned repayment process, while directors of SFSP and their agents or connected parties are prohibited from involving in any activities of SFSP in any manner.
The CBSL wishes to inform the public that SFSP has not been permitted to carry on any finance business or non-finance business whatsoever, except executing the aforementioned repayment plan and recovering of all money due to the company.
Therefore, t he public is kindly requested t o refrain from placing deposits or engaging in any other business with SFSP in any manner, other than settlement of any dues to SFSP as indicated below.
All debtors of SFSP are advised to pay their dues to SFSP on time, only through the bank accounts (Sampath Bank / Headquarter/acc. No. 2930013377 and Commercial Bank/kollupitiya branch/ Acc.no.1107428801) under the name of SFSP and maintain records for all payments to avoid any possible litigations against them for non-repayment of dues.
The date of commencement of the repayment of 50 percent of the remaining value of deposits of SFSP, after deducting 30 percent repayment made and the eligible compensation under SLDILSS, will be notified to the depositors by SFSP in due course.