Seylan Bank is withdrawing a disputed letter sent to its account holders requesting them to submit personnel details or face the threat of a suspension of the account. The bank, on the recovery path after its management was taken over by the Central Bank following the debacle of Ceylinco subsidiary, Golden Key Credit Card Co, says the letter was not properly worded and is being recalled, with fresh letters being issued.
It was earlier sent under the mandatory requirement of “Know Your Customer (KYC) “according to the Financial Transaction Reporting Act No.6 of 2006. Responding to a question raised by the Sunday Times FT on concerns expressed by dozens of Seylan customers over this letter, Bank Chairman Eastman Narangoda said on Tuesday he has already issued a directive to officials to remedy the situation, adding that the bank has no intension to suspend operation accounts of those who fail to submit their personnel details as mentioned in the letter.
“This is a mandatory requirement and customers should cooperate with banks by submitting their details to the bank as it is being done to prevent money laundering, terrorist funding and other underhand financial dealings.
It will also help to update information of customers,” he said KYC is the latest in a series of regulations that require banks and other financial institutions to collect private information on their customers far in excess of what is needed to provide normal banking services, in a bid to deter money laundering, etc. A senior official of the Central Bank (CB) said money laundering clauses provides wide powers even to freeze bank accounts but noted that such a clause cannot be invoked just because customers fail to submit their personnel details.
Mr. Narangoda said they were following CB instructions to update details of customers and noted that there is no cause for alarm as the bank’s performance and credit procedures have been streamlined and strengthened to ensure proper corporate governance and transparency. He disclosed that the Seylan Bank received deposits amounting to Rs.3 billion during the recent past three weeks and this was mainly due to the new management’s efforts to boost customer confidence.
The present deposit base of the bank stands at Rs. 100 billion. Interim results released by the bank for the six months ended 30th June 2009 show an after tax profit of Rs.188 million for the Seylan Group with Rs 138 million coming from the bank. Mr. Narangoda said that the reduction of expenses by over 20%, from Rs. 20 billion during the first quarter of this year comparing to the same period this year indicates that the bank has effectively tightened its grip on expenditure. The provision for bad loans has been brought down from 24% to 16%, he said.