CB permits Swarnamahal Financial to resume biz for 6 months

The Central Bank of Sri Lanka (CBSL) yesterday announced its decision to permit the failed non-bank financial institution Swarnamahal Financial Services PLC (SFSP) to resume business for a limited purpose, on a conditional basis.

The Monetary Board of the CBSL made an order permitting SFSP to recommence business for a limited period of six months, with effect from October 13, 2021.

The monetary watchdog via a press statement said the decision was made to explore the possibility of absorbing the entity to the ‘Master Plan for Consolidation of Non-Bank Financial Institutions Sector’. 

The Panel of Management appointed by the Monetary Board has been authorised to continue managing the affairs of SFSP and to initiate and facilitate the aforesaid process, while the directors of SFSP are permitted to carry out only the functions that will be authorised by the Director, Department of Supervision of Non-Bank Financial Institutions (D/SNBFI) and/or the panel.

The CBSL stressed that SFSP is ‘not’ permitted to carry on any finance business or other business whatsoever, except executing the process on being absorbed into the master plan.

“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 contractual obligations to SFSP,” the CBSL said.

It added that all debtors or any other parties who have payables to SFSP are advised to settle their contractual obligations to SFSP on time, only through the bank accounts under the name of Swarnamahal Financial Services PLC and maintain records as evidence for all payments, to avoid any possible litigation against them for non-repayment of dues.

Earlier in July this year, the CBSL suspended the business activities of SFSP, along with another financial institution, as insolvent due to several irregularities that took place back in 2011.

SFSP has a Rs.1.2 billion hole in its assets and liabilities and despite several attempts, no viable investor came forward with a proposal to revive the firm.

The CBSL was unable to move ahead with the liquidation process of the firm since the current government opposed the move when it came into power.