Failed Pramuka Bank: Depositors’ saga continues
The improper supervision of the country’s finance companies by the Central Bank has become endemic as corruption and mismanagement by the management of some of these companies which were unchecked have ended up in failure. People who have invested their hard earned savings, in these finance companies, were expecting an appreciable return on their deposits.
Unfortunately, due to the bad supervision by the Central Bank, corruption and mismanagement by the management of some of these companies have failed, losing the depositors’ money. The blatant failure of the Central Bank created mistrust among the people and created a financial upheaval in the country culminating in losing confidence of the investors, including the foreign investors, and a near collapse in Sri Lanka’s financial market.
One of such early failures is the Pramuka Bank. The downfall of this bank commenced about 15 years ago. The Central Bank then said that the only option available is to liquidate the bank and took steps to do so, but the depositors teamed together and formed an association to fight to get back their deposit money.
The banking regulator twice attempted to liquidate Pramuka, but the depositors urged court intervention and as a result after a long and arduous legal wrangle, with an act of Parliament it was turned into a state bank – Sri Lanka Savings Bank.
So far several finance companies have failed and settlement of the monies back to the depositors are at varying stages but it is surprising that Pramuka depositors money has not been still settled, now more than 20 years after its existence.
As far back as around the year 2,000 the depositors, board of directors and the officials of the Central Bank met together to arrive at a solution to the Pramuka issue.
An irate depositor, who declined to be named, who has deposited several millions of rupees told the Business Times that after all the ‘hullaballoo’ once Pramuka became a state bank a settlement plan was arrived at and 10 per cent of the total deposits were taken off for investment and the balance deposits were to be paid at the rate of 1.25 per cent annually.
This depositor said that the repayments were not regular and after nine years he has received only around 38.75 per cent up to 2016 with the promise that the entire dues would be settled by October 2017. Taking a hypothetical case say a person deposited Rs. 6 million in the year 2000 up to 2016 he would have received little less than half of his deposit, say only Rs. 3 million.
He said that after the last payment in 2016 nothing has been heard about the balance payment.
Several of the depositors who have deposited large sums of money in Pramuka are now left with no hopes of getting their money back, the number of depositors would be around 4,000 and the amounts due would run to billions of rupees. Meanwhile the man who is suspected to have embezzled these monies, Pramuka Bank founder Rohan Perera, is said to be living in a foreign country, and the authorities are not interested to apprehend this culprit through Interpol, bring him back to Sri Lanka, try, convict and recover all the monies defrauded and impose punishment appropriate to the crime.