The Monetary Board of the Central Bank (Monetary Board) has decided to wind up ETI Finance, due to the non-availability of a viable plan to revive the company through capital infusion and the continuing insolvent position.
The Director, Supervision of Non-Bank Financial Institutions will make an application to a competent court for the winding up of ETI Finance Limited (ETIF), in terms of Section 31(5)(b) of the Finance Business Act, No. 42 of 2011 (FBA).
Due to the various irregularities that have taken place since 2011 and inability of the Board of Directors and the senior management of ETIF to address the resultant issues, the Monetary Board on January 2, 2018, issued directions to the directors of the Company and appointed a Panel of Management to oversee the affairs of the Company.
Even though the Monetary Board directed the Board of Directors of ETIF to bring suitable investor(s) to revive the Company, no viable investment proposal was available and the financial condition of the Company continued to deteriorate. In the meantime, 30% of ETIF deposits was repaid in 2018 and 2019.
The Monetary Board suspended the business of ETIF in terms of the Section 31(1) of FBA on July 13, 2020.
During the period of suspension, payment of compensation for the insured depositors under the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) commenced through the islandwide branches of the People’s Bank.
By end 2020, Rs. 8,941.6 mn had been paid to 65% of the insured depositors of the total of 37,586, up to a maximum of Rs. 600,000 per insured depositor. Such amount covers 99.9% of the Rs. 8,955.4 mn of eligible compensation under SLDILSS.
Even though the recovery of loans continued during the suspension period, the amount recovered by the Company was small.
The Panel of Management will continue to manage the affairs of ETIF and facilitate the winding up process.
SLDILSS will continue to pay compensation payment to the eligible depositors of ETIF, who have not received their compensation payment so far, up to a maximum of Rs. 600,000 per depositor.
The remaining depositors of ETIF are eligible to claim their dues in the winding up process. However, legal action against the Directors and other wrongdoers will continue without any hindrance.