Home » CB cancels Swarnamahal finance licence allowing SMBF to take over assets

CB cancels Swarnamahal finance licence allowing SMBF to take over assets

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The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to cancel the Finance Business Licence issued to Swarnamahal Financial Services PLC (SFSP), effective from yesterday (28 Dec).

Accordingly, as per Section 37(3) of the Finance Business Act, No. 42 of 2011 (FBA), SFSP will no longer be permitted to engage in Finance Business under the FBA with effect from today.

The Certificate of Registration of SFSP as a Registered Finance Leasing Establishment was also cancelled under the provisions of the Finance Leasing Act, No. 56 of 2000, on the instructions of the Director of CBSL’s Department of Supervision of Non-Bank Financial Institutions.

In view of the contribution made by SMB Finance PLC (SMBF) (then SMB Leasing PLC) to repay the remaining deposits of SFSP, as per the directions of the “Masterplan for Consolidation of Non-Bank Financial Institutions Sector”, unclaimed deposit liability of SFSP will be transferred to SMBF along with the corresponding assets value and relevant depositor information.

Further, Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) will take necessary actions to pay compensation to the outstanding insured depositors of SFSP up to a maximum of Rs. 1,100,000/- per depositor as per the regulations of the SLDILSS in due course.

Upon the transfer of unclaimed deposit to SMBF and payment of compensation through SLDILSS, the entirety of the deposit liability of SFSP will be settled.

SMB Leasing PLC is set to buy Rs. 425 million worth of assets of Swarnamahal Financial Services PLC (SFSP), enabling the latter to settle outstanding deposits.

The move follows the Central Bank, in principle, approving SMB Leasing (SMBL) to transfer Rs. 425.3 million to SFSP to settle outstanding deposits. I

In lieu of the transfer of funds, SFSP has to transfer the unencumbered title of three properties to SMBL. Thereafter, the licence of SFSP to conduct finance business was cancelled.

The properties, which SFSP will transfer ownership to SMBL, are 195.86 perches of bare land in Gangatennwatte, Angunawala, Kandy; 46 perches of land and building at 10, De Alwis Avenue, Mt. Lavinia, and three shops at the Ja-Ela Realty Plaza.

SMBL said the Monetary Board of the CBSL granted, in principle, approval to issue a finance business license upon completing the pay-off of public deposits and purchase of certain assets of a finance company at Rs. 425.3 million.

This was under the master plan for Consolidation of Non-Bank Financial Institutions of the CBSL.

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