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| Sunday, 19 October 2003 |
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Pramuka Bank : One year after Depositors in the lurch by Neomi Kodikara and Jayanthi liyanage As the 1st anniversary of the Pramuka Bank closure approaches, depositors who lost all their savings and employees who lost a livelihood are preparing a novel kind of commemoration to mark the debacle. They have decided to perform a religious pooja on November 25, at the temple of 'Goddess Kali in Modera' to invoke curses on those who were responsible for their predicament. "We are extremely displeased with the manner in which the Central Bank Authorities have been responding to our pleas, for the past year. They don't even bother to implement the order given by the Court," a member of the Depositors' Association charged. The Supreme Court recently ordered the Central Bank of Sri Lanka to seek the possibilities of opening the Pramuka Savings and Development Bank (PSDB). However the depositors and former employees of the bank accuse that the authorities were not acting on the orders. Each and every institution involved, keep passing the ball to the other, leaving over 15,000 depositors victims of mismanagement, corruption and fraud in the PSDB stranded and helpless. They have not received any compensation for the collective loss of their hard-earned money, alleged to be in the region of Rs. 3.2 billion, though accusations, counter accusations, post-mortems and bids to close the stable door after the horse has fled, has been plenty. It has been reported that three persons committed suicide, unable to bear the loss of their entire life's saving while one person died of a heart attack and 14 of others had suffered strokes upon hearing of the sudden news the PSDB closure. Here distressed Pramuka depositors speak about their plight and their predicament to the 'Sunday Observer'. ****** An authoritative source from the Central Bank: We have received three proposals for the restructuring of the Pramuka Bank and are studying them. Very little has come in through the loan recovery process, as 80 per cent of the loans were non-performing. We act in the interest of the depositors but the Depositors Association is campaigning against the Monetary Board and the Central Bank. Do the media take the trouble to investigate their bona fides? They ask to infuse money to the Pramuka Bank but the Central Bank is not legally empowered to so, and also, to give out information about Pramuka. The Ernst and Young Audit Report furnished to the interested investors carried all the required information. The list of information furnished to the investors was published in the press sometime ago. The delay in settling the issue was due to Court action and we, as Central Bank Management, will be with the Pramuka Bank right throughout. Palitha Gamage, Pramuka Depositors Association: We feel that the Central Bank should make a policy decision to open Pramuka Bank. Since it is not doing so, the investors are not encouraged to come forward with proposals to restructure the Bank. The Depositors Association submitted a restructuring concept to the Central Bank on September 17, but have not received a response from it yet. The Depositors Association Restructuring Committee's opinion is that the Central Bank has not provided the prospective investors with adequate information about the Pramuka Bank to formulate a proper proposal, and that is why only a concept was submitted. Pramuka Bank is now operative only to recover loans and in July, reported a recovery of Rs.107 million. Several customers who had come to the Bank to repay loans had felt discouraged at the bureaucracy they had to go through. We will take legal steps after the forthcoming pooja in November. K. K. Perera (36) from Panadura "My husband died of a kidney failure and the treatment was very costly. So I had to sell our house to get the funds for his treatment which cost nearly Rs. 150,000. I deposited the balance money, which was around Rs. 700,000 in Pramuka and the interest was the only income for us. Now there is no means of living for me and my daughter, who is 10 years old. We are staying with my in-laws. I pleaded the authorities to give us our monthly interest until the Bank reopens, but to no avail. We don't know whose fault, it was, but I am sure it is not mine. I invested in a bank, which was confirmed as a legitimate body by the Central Bank of Sri Lanka (CBSL). Ravi Thangarajah (36) a representative for the Paynter Children's Home, Nuwara Eliya. We invested two million rupees, which we received as donations, in the PSDB as they were offering higher interest rates. Besides, we did not have to worry as it was listed as a reliable bank in a list published in newspapers on September 12 last year and everybody knows what happened six weeks later. We experience immense difficulties in looking after 33 children. In fact, we are forced into a situation with a question whether we could continue to serve or should discontinue our service, as it is the future of innocent children that is at stake. W. D. Silva (69) Pensioner from Borella deposited one million which he received from the Employees Provident Fund, after 55 years of working at a private sector company. He was just after a surgery at Sri Jayawardenapura hospital which cost about Rs. 150,000 and walks with clutches. However, today he does not have any money to spend on his medicine. "Now I have no means of income other than depending on `small' loans from friends and relatives. But how long can I continue like this? It is not because we had plenty that we deposited, we did so, because the monthly interest was our only means of living. My son, who is a graduate is still jobless. V. R. Jayasinghe (58) from Nugegoda I deposited Rs. 300,000 which I got as a retirement benefit. This is my hard-earned money after working for so many years. Greed was not the reason for us to choose Pramuka Bank. Living expenses were too high and as they were offering a very attractive interest rate we went to them. Besides, we had faith in the CBSL as a supervisor and guarantor. I lived upon the interest. Now I am penniless. This situation has put a dark cloud over the entire banking system in the country and people are losing their faith in banks. Who is responsible for this? Up to date no person or institution has taken the responsibility. How did the top officials leave the country without any difficulty? The so called `Timely' intervention of the Central Bank of Sri Lanka has left the depositors high and dry. Now it tries to hide its negligence behind various excuses, some of them are nothing but mere jokes. The CBSL says that the Pramuka bank was warned many times, then why did they not issue it through the media so that the depositors would get the warning? We were totally mislead by wrong information by so called responsible authorities. Bandara Menike (43) a spinster with no parents or a job, sold the only property she had, a block of land and deposited Rs. 250,000 in the Pramuka Bank `on the recommendation of V. R. Jayasinghe, her relative'. She stays with her sister and was living on the bank interest. She too has undergone surgery and is driven into a pathetic situation, unable even to spend on her medicine. Mr. V. P. Ruwandeniya's entire life's saving Rs. 325,000 was deposited in the PSDB. He is suffering from many ailments including a kidney failure and has been transferred to Welisara Hospital. His wife attributed the reason for his recent health failure to the loss of his hard earned money. "It made him upset. He does not sleep, worries and sometimes cries in his sleep," she said. "What is the use of money if he cannot use it when he really in need," she said adding that they had no house or job for their son and the bank interest was their only income. A.H. Mendis, Managing Director, Pramuka Bank: The Courts have given us the green light only to carry out the recovery of loans. Before the Bank was suspended, our practice was to refer to the Central Bank on recoveries but now we are allowed to act direct, and keep the Central Bank informed. Some repayers ask for interest rebates. But we have to apply the standard rates existing prior to last October, as we have no power to amend the rates. Changing the rates would amount to entering into a new contract with the customer but under the suspension we are not empowered to do so. Although, our customers continued to pay, some of them were not uptodate in payments. In terms of the Central Bank definitions, we had to treat such accounts as non-performers. Considered in that light, our non-performing assets went up to 75%. Therefore, we were at a situation where our interest was reduced, creating a problem in the profits. As a specialised bank, our only income was in the interest we received, with no other income as commissions on Letters of Credit and international trade, etc. We did not have 'parate' or debt recovery rights and we brought various proposals to the Central Bank to change this situation, but ended up with losses. My position is that if we have an aggressive recovery drive, and are given powers as same as other commercial banks, we can recover. The Depositors Association and our institutional depositors which comprise about 60% of our deposit base, including the Road Development Authority, Samurdhi and rural banks, have agreed to maintain the deposits with us for two years, without withdrawing. If we liquidate, we will lose 30-40 per cent deposits. From five to ten percent depositors have urgent requirements such as medical expenditure and, in the case of the pensioners, the monthly living expenses. If we can decide to repay them, evaluating each on a case-by-case basis, it would keep them satisfied. Our previously 150 staff have now been reduced to 90. Although the Central Bank has granted us approval to work only two days a week (Tuesday and Wednesday) on loan recovery, I have asked them to grant us three days a week, as we cannot cope with the customer requirements. We are prepared to work even five days and my request is to get the entire staff working on loan recovery. We are prepared to sacrifice our perks until the Bank revives. If the Pramuka Bank closes, all of us will lose, except the Central Bank. If Pramuka opens, all of us win, including the Central Bank. I do not know much about the Depositors Association Restructuring Committee, but it is surprising that the Pramuka Bank does not have a member there. How can they act for the Bank, without having a member from the Bank? The Pramuka Bank Management too submitted a new proposal for restructuring, to the Central Bank. Although we cannot pay back 100 per cent of the deposits, about ten per cent we can service. I feel that the more we delay, the more problems we will encounter. ******** A Business Development Executive for the PSDB who joined in 1999. There were seven of us stationed in outstation branches. We were canvassing depositors and collected around Rs. 350 million for the PSDB. Most of the outstation depositors were from the Government institutions and others were our friends and relatives. Now we cannot face them. We had meetings with the top officials including Rohan Perera once in two months, but they at least did not imply what the reality, they only created a rosy picture. Moreover, we were carried away by the annual report in 2000-2001. We did know that all was not well in the financial system but could not reveal it to the public as we were bound by company ethics. |
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