Financial Times

Submissions continue in Pramuka Bank case
The Appeal Court last week continued to hear submissions made by counsel for the Central Bank who maintained that the Monetary Board (MB) had seriously considered the option of restructuring the failed Pramuka Bank after going through offered proposals.

State Counsel Milinda Gunatilleke appearing for the Central Bank and the MB submitted to Court that the Board studied the Asia Capital proposal on restructuring the failed bank. He said this proposal called upon the Monetary Board to waive off liquidity ratios and capital adequacy requirements which the central Bank was unable to accede as they were statutory requirements by law and thus the bank was compelled to reject the proposal.

The case came up before Justices P Wijeyaratne and K Sripavan. M A Sumanthiram with V Arulanantham and Viran Corea instructed by Maohan Balendra appeared for the petitioners, depositors of the bank who are asking court not to permit the Central Bank to liquidate Pramuka. Gunatilleke explained how the Monetary Board went through the process to accommodate restructuring and referred to various documentary evidence and how it acted to help the Pramuka depositors.

Sumanthiram, Counsel for the depositors, brought to the notice of Court that there is legal provision for the Central Bank to change the Board of Directors of Promuka and though the depositors insisted on this, the Central Bank failed to change them. He said if the Pramuka Board of Directors were changed the image would have been better and more interest would have been attracted.

Half way through the arguments of the state counsel, Sumanthiram, pointed out that the Central Bank has taken the decision to liquidate Pramuka without waiting for the consent of the Provincial Road Development Authority on the Asia Capital proposal.

The Court considered the suggestion and ordered a recess in the proceedings to see if the depositors could obtain the consent from the Authority and the Public Trustee, the biggest institutional investors in Pramuka.

The case will be called on March 3 to ascertain whether PRDA and PT have agreed to these proposals.

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