Financial Times

Pramuka Bank crisis
Deadlock over depositors' list
By Quintus Perera
A group of depositors trying their best to revive the failed Pramuka Savings and Development Bank (PSDB) have been asked by the Central Bank to prove that all the 15,000 depositors are on their side.

This is not an impossible task for the group except for one problem - only the Central Bank has the full list of addresses of depositors but refuses to part with it. K.C. Vignarajah, chairman of the PSDB Restructuring Committee, quoted Central Bank officials as saying that due to the law of confidentiality they are unable to release the list of addresses of the depositors. On the other hand the Bank says the consent of all the depositors is necessary to consider the depositors' proposal to restructure the PSDB.

As the date for a Central Bank decision on whether to liquidate the bank or re-start its operations nears, both sides are now deadlocked on the issue of depositors and their addresses. PSDB was suspended in October 2002 and a fresh six-month order issued subsequently which lapses on January 21, 2004.

These issues were discussed during a meeting between Vignarajah, a well-known industrial consultant, and Central Bank officials on Thursday. He said at several earlier meetings of the depositors and stakeholders, the entire membership present - though not all the depositors - had endorsed the proposal to restructure PSDB.

He said if they could contact all the depositors, getting their consent is not difficult.
Officials say if the Central Bank wants to issue a fresh suspension order for a variety of reasons including sufficient time for the restructuring proposal to be examined, it would have to seek a court order to do so.

Palitha Gamage, Secretary, Pramuka Depositors and Stakeholders Association, told The Sunday Times FT that their members were getting restive with time running out. If there was no favourable decision from the Central Bank in two weeks time, depositors are planning to launch a massive protest campaign to compel the authorities to re-open the PSDB.

Meanwhile financial analysts have said that court cases filed by Pramuka Bank depositors opposing the Central Bank's plans to liquidate the failed bank are preventing legal action being filed under the Companies Act against PSDB directors who could be held personally responsible for its collapse.

If the cases drag on it might not be possible to take action under the Companies Act because of the two-year time limit within which action must be taken under this Act, they said.

PSDB, started by banker Rohan Perera now on the run and believed to be hiding in the UK, was suspended after the bank's management, through alleged fraudulent dealings, ran up losses that made it impractical to revive the bank.

The depositors are fighting the liquidation in the apparent belief that they would be able to recover more of their funds if the bank is revived. No commercial bank has come forward to help revive the bank after the Central Bank invited offers.

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