ETI Finance Limited to be wound up

The Monetary Board of the Central Bank has decided to ask Director, Supervision of Non-Bank Financial Institutions to make an application to a competent court for the winding up of ETI Finance Limited (ETIF), in terms of Section 31(5)(b) of the Finance Business Act, No. 42 of 2011 (FBA). Due to the various irregularities taken place since 2011 and inability of the Board of Directors and the senior management of ETIF to address the resultant issues, the Monetary Board on January 2, 2018, issued Directions to the directors of the company and appointed a management panel to oversee the affairs of the company.

Even though the Monetary Board directed the ETIF Board of Directors to bring in suitable investor(s) to revive the company, no viable investment proposal was made available and the financial condition of the company continued to deteriorate. 

In the meantime, 30 percent of ETIF deposits were repaid in 2018 and 2019.

Having considered the continuously deteriorating financial condition and non-availability of a viable revival plan, the Monetary Board decided to suspend the business of ETIF in terms of the Section 31(1) of FBA with effect from July 13, 2020.

During the period of suspension, payment of compensation for the insured depositors under the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) commenced through the island wide branches of People’s Bank. 

By end 2020, a sum of Rs. 8,941.6 million has been paid for 65 percent of the insured depositors out of the total of 37,586, up to a maximum of Rs.600, 000 per insured depositor. Such amount covers 99.9 percent of the Rs.8, 955.4 million of eligible compensation under SLDILSS. 

Even though, the recovery of loans continued during the suspension period, the amount recovered by the company was not substantial.

The Central Bank said SLDILSS will continue to make the compensation payment to eligible ETIF depositors, who have not received their compensation payment so far, up to a maximum of Rs.600,000 per depositor. 

Further, the remaining depositors of ETIF are eligible to claim their dues in the winding up process. However, Central Bank stressed that legal action against the Directors and other wrongdoers will continue without any hindrance.