Central Bank takes over ‘ETI Finance’ and ‘Swarnamahal Financial Services’

Central Bank takes over ‘ETI Finance’ and ‘Swarnamahal Financial Services’

By Lahiru Fernando

02 Jan, 2018 | 10:02 pm

The Central Bank has taken regulatory action on ETI Finance Ltd and Swarnamahal Financial Services PLC.

According to the Central Bank, this is being done to safeguard the interests of the depositors and other creditors of the two companies. Another reason is to ensure safety and soundness of the financial system.

Thereby, the Central Bank has decided to appoint a panel to;

  • Manage affairs of both companies
  • Restrict the withdrawal of maturing deposits
  • Renew maturing deposits for a period of six months

In addition, payments of interest due for deposits must be done as per agreed terms and conditions.

The Central Bank says the companies can finalize negotiations with the prospective investors and the Central Bank will facilitate suitable investors as per the applicable laws and regulations.

Why did the Central Bank have to step in?

According to CBSL Governor Dr. Indrajit Coomaraswamy, the Central Bank attempted to improve the situation through directions.

“but directions were violated on a regular basis, that’s why it didn’t turn around. Now we have taken it over and our panel of experts will run the show.” he added

Dr. Coomaraswamy says that there was mismanagement which led to a liquidity problem. He pointed out that the CBSL had to take action as it has become critical.

The Central Bank had issued the first direction in the year 2012.

Is it the Central Bank’s fault?

According to the Governor, CBSL has been trying to get these companies on the right course. “How is it the central banks fault.” he questioned.

“I don’t think you can blame anybody in this room. You know the political climate in this country. Our technicians cant always operate in the manner they need to.” – said Dr. Coomaraswamy