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Pramuka Bank closure : Decision next week

A decision regarding the future functioning of the troubled Pramuka Savings and Development Bank will be announced by the end of next week, the Central Bank of Sri Lanka said yesterday.

The business of PSDB was suspended on October 25 after the CBSL discovered that it was in a weak financial position placing the interests of depositors and creditors in peril. The CBSL closed the bank for 60 days and said it would probe its accounts and decide whether the bank will be allowed to function or liquidate before that date.

Yesterday's announcement said the CBSL was "hampered by several unusual and questionable transactions that PSDB had entered into". It said the services of auditors Ernst and Young had been obtained to unravel these deals and pronounce a diagnosis on PSDB.

The CBSL will now report to the Monetary Board by November 22, more than a month ahead of the 60-day suspension period their findings so that a final decision as to whether the bank should be permitted to resume functions "with our without conditions" or be liquidated, can be arrived at.

Some 15,000 depositors and many thousands of customers of the bank have had an anxious time awaiting the result of the CBSL probe. The Central Bank said it "regrets the anxiety and the inconvenience caused to the customers and the public", by the inquiry. The PSDB is a licensed savings and development bank that operates out of its single branch in the city of Colombo and does not conduct business in the manner of a conventional commercial bank. Almost all of its depositors are from the Greater Colombo area.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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