The Monetary Board of the Central Bank of Sri Lanka (Monetary Board) 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 (Panel of Management), 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, in terms of Section 31(5)(a) of Finance Business Act, No. 42 of 2011 (FBA), only for the purpose of repayment up to fifty percent (50%) of the remaining deposits of the Company (repayment plan).
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% 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 FBA, 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 issued by date through the island wide branches of the People’s Bank.
By end 2020, a sum of Rs. 834.1 mn has been paid for 25% 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% of the Rs. 982.9 mn 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 utilized 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.
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, the public is kindly requested to 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.
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