New hopes for GK depositors under fresh CB financial support scheme
Infusing new hope amongst Golden Key (GK) depositors after more than six years of the collapse of the credit card company in December 2008, the government gave a firm assurance this week to initiate the repayment process within a month under the Central ank’s (CB) financial support scheme.
The government is exploring the possibility of using a facility from the CB’s Sri Lanka Deposit Insurance Fund (SLDIF) or Treasury consolidated fund to implement the repayment process till the process of selling GK assets begins, official sources revealed.
Finance Minister Ravi Karunanayake and Central Bank Governor Arjuna Mahendran meeting depositors.
The settling of GK security deposits of all depositors under this initiative is to begin next Monday along with the withdrawal of all court cases filed by depositors in accordance with an agreement reached with the Finance Minister Ravi Karunanayake in the presence of Central Bank Governor Arjuna Mahendran at a meeting in Colombo on Wednesday.
Outlining the modalities of the repayment process, Mr. Karunanayake said that a 15-member committee comprising GK depositors will be appointed by the Governor to oversee the repayment process.
Liquidation of GK assets and repayment on pro rata basis will be handled by a board of directors and auditors appointed by the CB with Governor serving as the CEO, he disclosed.
Mr. Karunanayake gave an undertaking on behalf of the government to repay the 40 per cent of security deposits of all GK depositors numbering over 7,200 within one year, after the withdrawal of cases filed by them.
Cases pertaining to the company are pending in the Supreme Court, High Court and Colombo Commercial court. The orders relating to payment plans or depositors were given by the Supreme Court hearing the FR case.
He told a packed audience of GK depositors at the Finance Ministry auditorium in Colombo, that the government will give a written guarantee to repay all the depositors under a new repayment plan within a year when the GK FR case comes up for hearing on Monday, May 18 (tomorrow)
The letter undertaking the repayment will be handed over to Supreme Court on that date, he assured the depositors.
The depositors have agreed to withdraw all the GK cases on that date, he told journalists after the meeting with them.
Depositors who have deposited up to Rs.2 million will be repaid in a month and repay those with up to Rs.10 million within two months, he said adding that monies of other depositors will be settled within one year.
The Central Bank will work out the repayment mechanism soon after the withdrawal of the cases, he disclosed.
He also agreed to consider the request of one depositor to re-pay a maximum of Rs.1 million for all depositors during the repayment process.
All the depositors attended the meeting unanimously endorsed the repayment plan of the Government revealed by the Finance Minister.
A total sum of Rs.2.1 billion has already been paid to depositors under four phases of the previous action plan devised by the CB.
The failed GK credit company had a deposit base of Rs. 26.5 billion when it crashed in 2008. It had been paying a lucrative interest of 16 per cent and over and even 35 per cent for selected depositors on a credit card scheme where available balances accumulated interest.
The crash caused severe economic problems for many depositors. Nearly 100 depositors have died since the collapse and 23 have committed suicide as they waited for the payments.
The previous government had failed to find proper redress for grievances of the depositors during the past six years.
Amidst many appeals by such affected depositors, the Rajapaksa regime put forward an action plan devised by the CB to repay 41 per cent of total security deposits and convert the balance to shares of the failed company after resurrecting it.
The Business Times reliably learns that the Rajapaksa government entered into a secret pact with a depositors’ association to expedite the repayment process if they supported the regime by endorsing the impeachment and conducting protest demonstrations against former Chief Justice Shirani Bandaranayake.
They held a protest demonstration in front of the residence of the former Chief Justice to get some relief from the then government in January 2013.
The CB’s plan of action for the collapsed GK company introduced as a goodwill gesture for the support extended by a GK depositors Association during impeachment saga of former Chief Justice has not been able to save a large majority of disgruntled depositors from the misery they are encountering at present, depositors said expressing belief that the new government‘s initiative will bear fruit.