The Central Bank of Sri Lanka (CBSL) would be paying the now defunct finance Company, ETI Finance Limited (ETIF) depositors a total amount in excess of Rs 10 billion without any financial contribution from the Government of Sri Lanka (GoSL), the CBSL, in a statement issued yesterday (2), said.
It said that this was possible due to a sum of US$ 70 million received by the disposal of identified subsidiary, sub-subsidiary companies, and investment properties of ETIF, which, according to the exchange rates at the time of receiving money through the above four tranches, was equivalent to over Rs 11 billion, it said.
These funds have been already utilised to repay 20 per cent of the deposits and accrued interest liabilities of ETIF, the CBSL said. The company is currently processing a further 10 per cent repayment to the depositors. This was possible after the CBSL took a number of measures on ETIF, to address various irregularities that had taken place since 2011, including severe liquidity constraints faced by the company during the latter part of 2017, the statement said.
Originally, the CBSL’s Monetary Board (MB) gave its concurrence on 21 February to dispose of identified subsidiary, sub-subsidiary companies, and investment properties of ETIF for a total consideration of US$ 75 million, with the view of repaying the depositors utilising the sale proceeds.
The transaction had to be concluded excluding certain assets for a total consideration of US$ 70 million. Since the buyer did not remit the remaining US$ 5 million, ETIF has retained its subsidiary, Swarnamahal Financial Services PLC (SFSP), which was intended to be transferred for the corresponding value.
ETIF and SFSP, along with the CBSL, are currently considering alternative measures to revive the SFSP, the CBSL said.
Proposals submitted by an investor to revive ETIF and SFSP are being extensively considered and further developments in this regard will be communicated if these proposals are implemented, the statement said.
The CBSL further said that a number of regulatory measures have been taken on ETIF from time to time which resulted in, inter alia, the directors of ETIF transferring their personal assets, including EAP Broadcasting Company Ltd and Swarnamahal Jewellers Ltd, and the directors giving an undertaking to transfer additional personal assets to cover the negative net worth of the company.
As a result of the regulatory actions taken since the time of identifying the issues of ETIF, the company was able to realise this amount of cash to repay the depositors by disposing of the assets transferred to ETIF. Further, the CBSL has also initiated several legal actions against the directors of ETIF, to seize the personal assets of the directors and transfer those proceeds to ETIF, the CBSL said.
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