ETI Finance company to be liquidated due to bankruptcy

COLOMBO (News 1st) - The Central Bank of Sri Lanka announced that necessary steps will be taken to liquidate the ETI Finance company, which is currently under the ownership of the EAP group. Such a decision would be taken only if the financial crisis faced by the company is not resolved by the 30th of September. Officials of the Central Bank had reportedly met with depositors of the embattled finance company. Expressing ideas a depositor of the ETI Finance stated that the matter was looked over last week and that there are three central bank representatives on the top floor of the ETI headquarters. He further stated that they had met with them and were informed that they have been given time until the 30th of September to make payments to the depositors or to at least bring in an investor. A sum of about 67 percent would be paid upon liquidation and the problem could be resolved within a period of 6 months. "We also asked about the new investor who is coming in. The Central Bank representative Ranaweera said that Shiva Jothi is the broker and not the investor" claimed the depositor. However, controversial situations had arisen upon directly questioning Mr. Shiva Jothi yesterday about him being either the investor or the broker. To which he had replied that he is the investor, and also the Director and that it would be purchased under his name. A meeting was held between members of the ETI Board of Directors and depositors at the company's head office yesterday. (July 14) ETI Finance reportedly has over 25,000 depositors at present. These depositors claim that the total sum of deposits amounts to approximately 36 billion rupees. Non - banking financial institutions including the ETI Finance are regulated through the supervision of the Central Bank's Department of Non-Banking Financial Institutions. Among the regulatory functions of this department are the supervision of these finance companies and the calling of annual income and expenditure reports. JVP provincial councilor, Wasantha Samarasinghe stated that whether a bank or a finance company if the money is being collected from the public then it falls under the purview of the Central Bank of Sri Lanka. Wasantha also continued that while companies like ETI were collapsing recently, deposits amounting to about 32 billion rupees were collected from the public. "Even if you add up all the assets of this company it will not amount to even 15 billion rupees. Now there is a question as to how they will repay the 34 billion in deposits. We suspect whether while this company was collapsing, a portion of the public's deposits found their way into the hands of these central bank officials" continued Wasantha. Reports indicate that a new investor is to come on board to resolve the financial crisis faced by the ETI Finance and that it will lead to an investment of 75 million US dollars. It is also noted that of this total, a sum of 32 million dollars has already been received. Therefore, depositors have reportedly received 10 percent of this sum. Meanwhile, Chameera Perera Convener of the Left Centre stated that if such an investor has paid money, then that money should be used to repay the depositors in order to resolve the ETI crisis and that it should be the first priority. The Central Bank has been conferred the responsibility of regulating banks and registered financial institutions. ETI Finance Limited is bankrupt today due to the lack of proper supervision by the Central Bank and because depositors money was poorly managed and used to finance other businesses. As a result, a large group of depositors have lost their investments. It was only afterward that the government stepped in to provide relief to the depositors.