The government was planning to bring in new laws in September to enhance the scope and the independent decision-making capability of the Central Bank (CBSL) to further regulate the banking and the non-banking sectors.
State Minister of Finance, Eran Wickramaratne referring to the ETI Finance, yesterday, in Parliament said that CBSL had played its role finding an investor who had invested US$70 million, which was used to pay back 30% of the deposits.
Wickremaratne said that the deposit insurance scheme of the CBSL would only cover up to Rs.600,000 whereas large deposits were not covered. “ETI was dissolved through the CBSL and not by giving it to a private party known to the Minister of Finance. Investors for ETI were brought through the CBSL. The initial investment was US$70 million, and it was used to pay 30% of the deposits. The balance deposits cannot be paid using taxpayer’s money. The CBSL is now holding a discussion about the two remaining companies. In the absence of finding an investor for those, the balance can only be settled by selling the assets,” he said.
Minister Wickramaratne rejecting opposition charges of driving the economy to doldrums during the past four years said: “There is no collapse in the economy. If you talk about the fall of finance companies be it the EAP or the Ceylinco Group, they collapsed not during the current Government but the previous Government. These are private companies and the Government should not be blamed for the collapse. Any business can collapse at any time. People deposit money based on their private assessments to deposit money in these organisations. There is a risk when you deposit money in any institution and the return is decided based on this risk. The interest paid by the banks is less due to low risk. When it comes to other financial institutions the interest rate is high.”
(Source: The Island – By Saman Indrajith)