Biz activities of ETI Finance, Swarnamahal Financial Services suspended

• Published date: 14 July 2020
• Publication title: Daily Mirror

The Central Bank (CB) yesterday announced the suspension of business activities of ETI Finance Limited (ETIFL) and Swarnamahal Financial Services PLC (SFSP), which were formerly owned by the Edirisinghe family.

'The Monetary Board (MB) of the CB at its meeting held on July 10, 2020, has decided to suspend the business of ETI Finance Ltd (ETIFL) and Swarnamahal Financial Services PLC (SFSP), in terms of Section 31 of the Finance Business Act, No. 42 of 2011 (FBA), with effect from July 13, 2020,' a statement said.

The CB noted that two non-bank financial institutions (NBFIs) have become insolvent, due to various irregularities taken place since 2011.

In 2018, the MB appointed a Panel of Management to oversee the affairs of both companies, after the board of directors and senior management of the respective companies failed to address the liquidity issues in the two firms.

Consequently, ETIFL and SFSP settled 30 percent of the deposits outstanding of each company, by selling their key assets.

ETIFL, being the larger of the two firms, had a massive US $ 100 million hole in its assets and liabilities and SFSP had a Rs.1.2 billion hole in its assets and liabilities.

Despite several attempts, the CB noted no viable investor came forward with a proposal to revive the two firms.

'Even though the MB directed the board of directors of both companies to find suitable investors to revive the companies, no viable proposal did materialise. Due to the inability to revive the companies successfully, the financial situation of both...