New savings bank from March

Sri Lanka Savings Bank (SLSB), set up last year to absorb the now defunct Pramuka Bank depositors’ assets and liabilities, will be ready to run by next month, according to Central Bank and Finance Ministry sources.

“We are looking for premises to set up the SLSB and have earmarked a few places,” a Finance Ministry official told The Sunday Times FT, adding that things are moving very fast. Dr. Ranjith Siyambalapitiya, Deputy Finance Minister will hold a meeting with Pramuka Bank depositors together with several other stakeholders on Tuesday.

“Ven. Athuraliye Rathana Thero, Jathika Hela Urumaya MP will also participate at this meeting,” he added.

Ven. Rathana Thero told The Sunday Times FT that he will attend the meeting on Tuesday together with Central Bank and Finance Ministry officials and the Pramuka Depositor's Association. “We will be discussing issues pertaining to the depositors’ funds, how to repay the depositors’, the areas for concerns, etc,” he said.

The Central Bank facilitated SLSB’s incorporation last year through an amendment to the Banking Act. “It is assisted through the Banking Act amendment 46 of 2006,” a Central Bank official told The Sunday Times FT, adding that the amendment seeks to facilitate the vesting of a Licensed Specialised Bank (LSB), whose license (Pramuka) has been cancelled, into a state bank. She explained that the amendment explains how the assets and liabilities of such a LSB are transferred to a state bank.

“The Central Bank has drawn up a scheme to account for the depositors’ assets and liabilities,” she pointed out, adding that the regulator will publish the necessary guidelines for the depositors. She also said that SLSB will function as a commercial bank and that there is a plan to re-invest the Rs.3.5 billion in treasury bills, thereby providing higher value and security.

“We have got the furniture, sorted out without any payment and we want to minimise the administration costs as much as possible,” the Finance Ministry official explained, adding that the government will put in nearly Rs.1.5 billion minimum capital requirement initially. Former Chairman, Insurance Corporation, Dr. Jagath Wickramasinghe has been appointed as the Chairman of SLSB.

Meanwhile, the Pramuka Bank Depositors’ are voicing concerns over the delay in setting up the SLSB which was to start by the end of last year.

“Dr. Siyambalapitiya together with COPE Chairman. Wijedasa Rajapakse is expediting the process and we hope it will be done by next month,” K.C. Vignaraja, Chairman, Pramuka Bank Restructuring Committee told The Sunday Times FT. He said that more than one year ago it was agreed with the Treasury to settle the depositors’ liabilities with due interest. “We agreed to not withdraw the fixed deposits for one year, exempting the depositor's in dire straits – that too on a case by case basis,” he explained, reiterating that this decision to protect the depositors’ have taken more than five years and is long overdo.

The Pramuka Bank which was seized by the Central Bank in October 2002 has 15, 495 depositors and state institutions which had deposited nearly Rs 350 million. Around 3,500 depositors have accounts amounting to less than Rs.100,000.