Financial Times

Pramuka Bank depositors devastated
By Quintus Perera
Depositors of the failed Pramuka Bank, among whom were widows surviving on interest payments and elderly people hoping to recover their deposits for surgery, have been devastated by the Central Bank's decision to close the bank.

Some, in their grief, even threatened to commit suicide. They had been living in hope of recovering their money if the bank was revived but are now resigned to the fact that they would lose much of their deposits. A number of Pramuka depositors contacted by The Sunday Times FT expressed dismay that the present government had not come to their rescue and for not taking any tangible action against its former management which was responsible for its collapse.

Depositors, among who were those who had hoped to withdraw their money for medical treatment or depended on interest payment, said they were disappointed by the decision as they had been given hope that the bank could be revived.

Evelyn Fernando (72) of Rajagaha Mawatha, Kanuwana, Ja-Ela had deposited around Rs 400,000 in Pramuka. She said she had hoped to have eye surgery as there were indications that Pramuka would be reopened and a part of their deposits would be reimbursed. Now she lamented that she would have to go blind. Another Pramuka depositor, C. R. M. E. Fernando (70), a widow, has deposited around Rs 500,000. With no children, property or any other income she has been depending solely on the interest provided by Pramuka.

She said, "All these days I have been borrowing and paying for my medicine on the promise that the dues would be paid once I received the Pramuka money. I am now destitute with nowhere to go and no one to ask for help."

She implored the authorities to do something to get her money back or else she said that she would have no alternative but to commit suicide. K. C. Vignarajah, President, Pramuka Restructuring Committee said that he has been inundated with telephone calls by the disappointed depositors inquiring about their plight and said that they would schedule an emergency meeting to review and study the situation before planning out the future strategy.

He expressed his dismay saying, "It is impossible to unscramble a scrambled egg and unique problems need unique solutions, including amending all the laws to protect innocent individual depositors who have relied on institutional mechanisms and checks and balances designed for a very fair and equitable society."

Ranjan Arambawala, one of the pioneers who championed the cause of the Pramuka Bank depositors, said that the Central Bank never meant to restructure Pramuka, but reluctantly pursued the revival initiative consequent to the court directive.

He said that a consortium of investors led by Asia Capital has come forward to pump Rs 500 million. The Central Bank on Wednesday said it was rejecting the proposal from Asia Capital citing many reasons for the decision and was placing the bank under liquidation.

Upali De Silva, Secretary of the Bankers Association of Sri Lanka, said he believed that the Central Bank looked into every possible option of reviving the bank before it decided to close it. Pramuka was not a member of the association.

"Although we're not directly involved we are certainly concerned that a bank is being liquidated for the first time in this country," said De Silva. De Silva feels that the biggest problem to be faced after the liquidation of the bank is paying off all its depositors.

Neomal Gunawardena, a company law expert at Nithya Partners, said that recovering loans given by Pramuka once it is liquidated would be a lengthy process. "The Central Bank (the liquidator) will have to collect all loans given by Pramuka and make periodical distributions to depositors," he said.

"This is a long process because after a bank is liquidated it is hard to establish contact with those they have given out loans to while functioning. "Pramuka and Vanik have seriously dented the confidence depositors and investors have in the banking sector," he said.

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