Business Times

Large-scale withdrawal of deposits would affect any institition

By Quintus Perera

No financial institution would survive if more than 20 % of its depositors sought to withdraw their deposits at once, said M R Shah, a former staunch bank trade unionist and now Chairman, Ceylon Merchant Bank, managing agent of one of the crisis-stricken companies of the Ceylinco Group – Ceylinco Investment and Realty Ltd which recommences business under a new name ‘ Standard Credit Lanka Ltd (SCLL)'.

He also referred to the crisis in some financial institutions in Sri Lanka being due to the effects of the global financial crisis, while speaking at the occasion of opening the first Pawning Centre of SCLL at its head office at Union Place, this week. He said that some strong financial institutions withstood the financial turbulence, while the less strong ones tended to fail.

He said that financial activities are conducted on trust and the moment that confidence between the financial institution and the customer is lost, then that financial institution would not survive. Therefore, all stakeholders in the newly re-emerged company are working very hard to build up this much needed trust and confidence.

He told the Business Times subsequent to the opening ceremony that the company affected very badly is now moving cautiously in selecting financial business areas and they have selected pawning as that area of activity involves less risk. The second pawning unit would be set up in Negombo in November. He said that the potential for pawning is more in rural areas and they intend to move to these areas.

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