Central Bank closely monitors EAP Group deal
Sri Lanka’s Central Bank (CB) is closely monitoring the deal between the EAP Group and a Singapore investment fund company to sell its subsidiaries of the group and rescue a struggling finance company, CB Governor Indrajit Coomaraswamy said in Colombo on Wednesday.
The Singapore investment is meant to resuscitate the ailing Edirisinghe Trust Investment Finance Ltd (ETIFL). But he noted that potential capital infusion would not completely resurrect the ailing company.
The cash infusion will be extremely helpful in stabilising the situation but it is essential to seek further capital to fully revive ETIFL, he added.
The Monetary Board has already granted approval to the valuation, and it was done in terms of the law.
He told reporters that the full financial commitment in the deal would be made in several tranches and the CB is watching as to whether the money being remitted to the company as capital is sufficient to meet this finance company’s commitments.
He noted that the investment will come in, in tranches and the CB is monitoring the credentials of the investor. Disgruntled depositors will get their money after the completion of the whole process, he disclosed.
Apart from this, investigations are being carried out as to how the ETIFL had fallen into an abyss and persons responsible for its financial crisis, he said adding that “we will have to complete the deal and then understand what caused the problem.” ETIFL a licensed non-bank finance institution, is to be revived with a capital infusion of US$17 million by a Singapore based Investment Fund Company aimed at protecting over 35,000 depositors, informed official sources revealed.
EAP Group entered an agreement with this company to sell some of its major subsidiaries at a price of $75 million with the sole aim reviving ETIFL and Swarnamahal Financial Services PLC, a high official closely connected to the deal said.
The Central Bank in January placed troubled ETI Finance and Swarnamahal Financial Services PLC of ETI Group under a three-member expert panel to bring the two troubled finance companies into normalcy in six months, mainly through the sale of assets within ETI Group. The panel consists of former Central Bank Assistant Governor Sepala Ratnayake, former Bank of Ceylon Senior Deputy General Manager P. A. Lionel and former Bank of Ceylon Assistant General Manager H. M. Thilakarathne