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Swarnamahal Finance gets permission to resume business for three months

Swarnamahal Financial Services PLC is to allow the resumption of business for a limited purpose on a Conditional Basis. Accordingly, the Monetary Board of the Central Bank has made an order permitting Swarnamahal Financial Services PLC (SFSP) to resume business notionally for a limited purpose and limited time.

This will be carried out 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.

This operation of the finance company is  limited for  period of three (03) months from 13th January 2021 to 12th April 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), Central Bank announced on Tuesday (12).

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 02nd January 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 13th July 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 amounts cover 84.9% of the Rs. 982.9 mn of eligible compensation under SLDILSS.

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