Six years on, Standard Credit Finance depositors still to get their money
The Deposit Protection Society of the Standard Credit Finance Co Plc says that more than 4,000 depositors and over 60,000 of their immediate and extended family members are yet to get their deposits, despite battling with the company and the authorities for the past six years.
In a letter to the Business Times, the Society said that these depositors in the early 2000s placed their trust in the public statements made by the Central Bank (CB) and invested their hard earned monies, mostly pension and other retirement benefits in The Standard Credit Finance Co Ltd (TSCFCL), which at that time, was known as Ceylinco Investments and Realty Ltd, which itself was a reincarnation of the Panadura Finance Co, which has a proud history over 60 years.
The letter said:
“For the past six years we have been vainly trying to recover our monies for which we have not received any returns whatsoever from TSCFCL, with the help of the CB. However, in mid 2014 the CB, under the direction of the then governor, came up with a proposal for reviving the ailing company, and thereby recovering our monies totalling Rs. 1.9 billion which up to then was held in shares and in limbo.
The salient points of this revival plan were:
1. As agreed, the managing agents, Entrust Ltd (EL) to infuse capital to the value of Rs. 2.5 billion into TSCFCL thereby enhancing its net asset value (nav) and increasing the floor marker value of each share to 60 SL cents.
2. The CB also volunteered to match this infusion of capital on a one-to-one basis, by giving TSCFCL an equal loan of Rs 2.5 billion under their liquidity support system (LSS), an inhouse disaster management contributory insurance scheme of sorts managed by the CB for all the finance companies registered with them, similar to the fluctuating statutory reserve system, that all commercial banks in Sri Lanka are obliged to maintain with the CB.
This was to be a 5-year loan with interest payable at 3 per cent p.a and reverting to Treasury bill rates after a specified period. This was not going to be a loan from public funds. In fact a loan of Rs. 6 billion has already been granted to The Finance Ltd under the same LSS facility by the CB in late 2014.
Furthermore TSCFCL has made it clear to the CB and the depositors that they will not be drawing on the full quota of the loan but only on what they actually require to enhance the value of the shares and make it marketable at Rs. 1 per share. What we really need is a commitment from CB that they will grant the loan at a future date, for which TSCFCL has already pledged a suitable and acceptable collateral with the CB.
3. The revival plan also told us that our shares will also be converted from non-voting to voting and with the enhancement of the worth of each share as spelled out above our share could now be listed and marketed at a floor price of Rs. 1.
4. The aforementioned proposals were all discussed, approved, minuted, and ratified by the CB’s Monetary Board who wrote to TSCFCL and asked them to proceed in the matter of listing the company with the Colombo Stock Exchange (CSE) asap. We wish to categorically point out that, everything regarding this revival plan was discussed openly and that it was a very transparent and lucid process. In fact there was nothing shady about these moves, as no bribes, gifts, santhosams, commisions or illegal offers were offered to any person, simply because in our dealings with the CB no such underhand moves ever crossed our minds, and we behaved like true ladies and gentlemen during the entire process.
The other DG’s, AG’s, directors and Addl. directors of the CB will certify this statement. With these new proposals, our depositors were happy that after a 6- year long period of suffering without our monies, a path to get them back had now been opened, and we quickly went on to appoint the new directors of TSCFCL as recommended by the CB, and having got our share certificates franked under the voting category, TSCFCL proceeded to make an application to the CSE in order to get our shares listed and this was done on 13-12-2014, and on 31-12-2014. The CSE informed TSCFCL that their application for listing had been approved adding two clauses that:
A. Reconfirmation of the loan under the LSS scheme be obtained from CB
B. Suitable collateral be pledged to the CB by TSCFCL for the LSS loan.
5. While clause B was almost immediately complied with, we the depositors and TSCFCL have got stuck with clause A, because with the change of government on 8-1-2015, there was a regime change at CB. And both the new governor and the new Snr. deputy governor have decided to pull the plug and ignore the previous monetary board decision on this very important and urgent matter merely because it was proposed by the previous regime at the CB, and instead had chosen to review the facility under the LSS scheme which, as we were informed by the administration will take around two months. It has now been revealed in the press, that the committee appointed to do so, have handed in their report with their observations. We like to know, what is now preventing the CB from taking a people-oriented and fair decision in this long drawn out matter?. Our requests for an interview with the new governor and/or the new senior deputy governor of the CB have to date not even received a reply.
6. In the meanwhile, we the hapless depositors and our dependents who have been struggling to recover our hard earned monies for the past six years, and who were made to believe that we will get back our monies in time for Christmas last year, now have not received it in time even for the Sinhala New Year. When will we actually get back our monies? It depends on the whims and fancies of the current regime at the CB with whom our finance company is registered.
Is this the good governance we all voted for? Maybe the next time elections come around we will have to give serious thought to the unhappy predicament we are in before casting our vote.”