Fresh hope for Pramuka Bank depositors

by Surekha Galagoda

The Bill to establish the Nava Lanka Ithurukirime Bankuwa or New Lanka Savings Bank will be presented to parliament on July 7.

The funds lying to the credit of the now defunct Pramuka Bank will be transferred to this bank and its Chairman will be Prof Jagath Wickremasinghe.

The bank will not give credit to customers but will accept deposits from individual customers as well as government institutions. The funds will be invested only in government treasury bonds and bills. Deputy Finance Minister Ranjith Siyambalapitiya said that he was happy that the bank will start functioning even after a delay or else the depositors funds would have been at stake.

He called upon the depositors not to withdraw the money for at least one year unless for an emergency because if they withdraw that will make the bank unstable. Minister Siyambalapitiya said that rescuing the depositors of the defunct Pramuka Bank is fulfilling a pledge given by President Mahinda Rajapaksa when he was the Prime Minister.

Ven Athureliye Rathana Thera said that even when a small bank collapses it affects the whole economy. Therefore it is more than opportune that the funds are transferred to a new bank and it starts functioning as soon as possible.

Treasury Secretary Dr P.B. Jayasundera said that the restructuring process was painful and tedious. Once a decision was taken to start afresh we had to get the licence, form the company, recruit the right people and pass the Bill.

All this is time consuming as the laws had to be changed to transfer the funds of the defunct Pramuka Bank to the new bank.

The Chairman of the Pramuka Bank Depositors' Association Palitha Gamage assured the minister that they will not withdraw the funds unless in an emergency and promised to support the bank in all possible ways. Prof Wickremasinghe said that he and his staff will do everything possible to make the new bank the best managed bank in the country while fulfilling the responsibility of increasing the savings ratio which is a national responsibility. He said that it is a team effort and called upon everybody to support the bank to make it the best bank in the country.

A representative of the cooperative movement said that they have deposited Rs 627 million and assured that they will not withdraw but will keep depositing to strengthen the new bank.

15,495 depositors hold Rs 3.5 billion of which 14,000 depositors hold less than Rs 100,000 each. Pramuka Savings and Development Bank (PSDB) Ltd started operations in 1997.

On October 25, 2002 the Central Bank suspended its operations. On December 19 the same year the Central Bank decided to wind up the business and cancel the PSDB licence.