Sri Lanka Savings Bank launch in early 2007

The 15,000-odd Pramuka depositors may have been disappointed that there was no reference to their plight in the budget but the Finance Ministry assured last week that a new bank catering to their needs would be launched early next year and is at the top of its New Year resolutions’ list.

Deputy Minister of Finance Ranjith Siyambalapitiya told The Sunday Times FT that Pramuka Bank depositors need not panic since all provisions have been made to kick start the Sri Lanka Savings Bank next year.

He was responding to concerns raised by K.C. Vignarajah, a longtime crusader of the Pramuka Depositors and Chairman of the Pramuka Bank Restructuring Committee who said they were perturbed by the non mention of the Pramuka Bank in the budget.

Siyambalapitiya said there was no need to mention the Pramuka Bank revival in the budget since allocation of funds for the minimum capital requirement of the new bank has already been provisioned for. He said the Road Development Authority and the Samurdhi Authority would be forking out a large part of the Rs 1.5 billion rupees needed to cover the minimum capital requirement for the new bank. The Treasury is prepared to cover the balance via a loan facility.

In June this year plans were unveiled by the government to revive the Pramuka Savings and Development Bank as a state bank under the tag ‘Sri Lanka Savings Bank (SLSB)’. The government at the time ensured that the Treasury would pump in the 1.5 billion rupees minimum capital requirement and a board of Directors was appointed to the SLSB with former Chairman of the Insurance Cooperation Dr. Jagath Wickremasinghe handpicked to lead the venture. The Finance Ministry also took the matter to parliament in July bringing legislation to transfer all assets of the Pramuka Bank to the proposed SLSB.

But since then there has been little information about the new bank which raised concerns amongst depositors leading to the budget. Vignarajah a former chairman of the Ceylon National chamber of Industries said whenever the matter was brought before court the Central Bank has been assuring the judges that it is taking over the assets and liabilities of the Pramuka Bank to a new bank and only the formalities are left to be attended to. “I would have expected that given these circumstances that there would be some mention of the matter in the budget and a reassurance that speedy action would be taken with respect to the needs of the depositors,” he said.

Deputy Finance Minister Siyambalapitiya, asked about the request made to Pramuka depositors not to withdraw their deposits from the new bank for at least a year, said: “This attempt to revive Pramuka is a humanitarian venture on the part of the government. So this is just a request and is not mandatory. The government also needs some assistance to get this new bank off the ground, considering the challenges it is facing in the economic front”.

The failed bank was taken over by the Central Bank in 2002 after the management racked up bad debts of around 2.2 billion rupees which were hidden for years through fraudulent accounting. As a result 15,495 depositors were left on the lurch with close to 14,000 depositors having less than Rs 100,000. “The government has retained the right to release the deposits block by block.

We will start with deposits less than Rs 50,000,” added the deputy minister. He said the new bank would function as a commercial bank and deposits will be re-invested in treasury bills thus promising higher value and much needed security to the long suffering Pramuka depositors.