Central Bank cancels CIFL, seals office in Colombo
The Central Bank (CB) on Monday sealed the premises of the Central Investment and Finance Ltd (CIFL) in Colombo following a decision to cancel the licence of the troubled company with depositors now hoping a court case they filed will bring some relief.
The CIFL office in Colombo after it was sealed. Pic by Priyantha Wickramaarachchi
In a statement that followed the sealing of the premises, the CB said that all insured deposits of CIFL will be paid up to a maximum of Rs. 600,000 per depositor as per the regulations of the Sri Lanka Deposit Insurance and Liquidity Support Scheme.
Witnesses said a group of 25 senior officials of the CB including security staff had ordered all the officials including those from People’s Leasing, the Managing Agents and the CIFL staff to leave the premises and padlocked the main entrance preventing anybody entering.
W. Gunawardene, President, CIFL Depositors Association said the officials included W. Ranaweera, Acting Director, Non-Banking Supervision Department accompanied by Kamal Dissanayake, Assistant Director, Non-Banking and Ms. Chamani Jayasinghe, Deputy Director.
Concerned over the development, Mr. Gunawardene said they were banking their hopes now on a fundamental rights case filed by the association in the Supreme Court which is to be heard on March 16.
The petitioners are seeking an order compelling the CB to enforce the proposals contained in the CB media release dated October 8, 2016 to introduce a fair and reasonable repayment plan equal to all depositors of CIFL without considering the deposit amounts.
On Monday, the banking regulator also cancelled CIFL’s Certificate of Registration as a Registered Finance Leasing Establishment under the provisions of the Finance Leasing Act No. 56 of 2000 (FLA) with immediate effect.
Mr. Gunawardene pointed out that the Central Bank is clearly violating its mandate by taking steps to liquidate the company as a case has been filed against the CB.
Expressing the frustration of the depositors, Mr. Gunawardene said the action to liquidate the CIFL stands as a clear warning signal to other failed financial institutions some of which are carrying on their struggles for more than 10 to 12 years.
Lakshman Rupasinghe, Non-independent Director, CIFL who acts as Board Chairman responding to the communications directed to CIFL and the relevant media release by the CB on the same issue said that the CB has not offered any option for them to act.
He said that the CB has now taken control of the affairs of the company and thus they have no power. What happened, he said, was the CB came and gave them notice. They objected on the understanding that there is an investor who is willing to bring in money.
He said that this investor gave them a letter saying that they will bring the money and this was almost two months ago, but there is no confirmation that this money has reached Sri Lanka.