The Central Bank has suspended the business activities of ETI Finance Ltd (ETIF) and Swarnamahal Financial Services PLC (SFSP), in terms of Section 31 of the Finance Business Act, No. 42 of 2011 (FBA) from July 13.
ETIF and SFSP had become insolvent due to various irregularities that had taken place since 2011.
Due to the inability of the Board of Directors and Senior Management of the companies to satisfactorily address the deficiencies, the Monetary Board (MB) of the Central Bank on January 2, 2018 issued directions restricting the affairs of the companies and the powers of the Board of Directors of the two companies.
A Panel of Management was also appointed by the MB to oversee the affairs of both Companies.
During the subsequent period both companies repaid 30% of the deposits outstanding of each Company through various measures.
Even though the MB directed the Board of Directors of both Companies to find suitable investors to revive the companies, no viable proposal materialised.
Due to the inability to revive the companies successfully the financial situation of both Companies continued to deteriorate.
As a result, ETIF and SFSP are currently not in a position to repay the deposits by themselves, irrespective of such deposits being matured, a Central Bank media release stated.