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| Tuesday, 10 August 2004 |
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All dues to be paid back to Pramuka depositors By Shirajiv Sirimane All depositors of the Pramuka Savings and Development Bank (PSDB), which was liquidated last week, would be paid back their dues by the Central Bank. Initially all depositors who had made deposits below Rs. 5,000 would be reimbursed their money at the end of this month. There are 9,104 depositors who had invested less than Rs. 5,000. According to Governor Central Bank, Sunil Mendis, Cabinet approval has been already given to change the Banking Act. "This will be tabled in Parliament soon and when this is passed we can pay over 2,000 additional depositors who have invested between Rs. 5,000 and Rs. 20,000," he said. Subsequently other depositors would be reimbursed their dues. The Road Development Authority, Public Trustee, Samurdhi Trust and Rural Development Banks are some of the large-scale depositors of the bank. Depositors' dues would be initially paid from the Bank's cash assets available. This is around Rs. 466 million. Pramuka Bank has also invested in Treasury bills which too would be used to pay back the depositors. The Bank's immovable assets and loans due from their customers would be utilised to settle the final payments. Steps have also been taken to relocate the Pramuka Bank from Colombo 3 to the Central Bank's premises in Rajagiriya. "This is to save the large monthly rental of Rs. 1.2 million, which is being paid, from the Pramuka assets," he said. The owners have requested to increase the monthly rental to Rs. 3 million from August. In addition the Central Bank under the Company and Bank Ordinance retrenched the excess staff from around 60 to 10. "Some of the staff members were drawing large allowances and this has already been stopped," he said. The Bank had deposited their Provident Fund in a private bank and part of it had been reinvested in the bank. The Pramuka Bank director board too would be penalised in due course. "We are in the process of taking legal action in this regard," he said. Director Central Bank, Ms. Joan de Zilva Moonesinghe said that there have been many instances that Banks have been liquidated in the region. "Pramuka Bank is the first bank in Sri Lanka to be wound up. She said that steps have also been taken to avoid incidents similar to the Pramuka Bank taking place. "We are closely in touch with the auditors and have spoken personally to some banks to correct some of their systems." Moonesinghe said that the Central Bank is happy with the local banking system," she said. She said that the Central Bank also did their best to reopen the bank but failed. The Monetary Board of the Central Bank suspended the business of Pramuka and cancelled its licence last week. This decision was taken by the Monetary Board after considering the feasibility of a proposal submitted by Asia Capital Ltd. (ACL) for the restructuring of the PSDB, and having considered matters placed before the Board by the Director of Bank Supervision, and a report of an independent firm of consultants. The decision was taken after taking into consideration that no other viable alternative is available. The decision is consistent with international regulatory practice, including action taken by central banks of other countries. |
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