Central Bank ensures stability of financial system

Deficiencies in the financial system can occur at any given time and it is the responsibility of the Central Bank to ensure the stability of the financial system. Due to the issue at the Golden Key company a possible liquidity problem at the Seylan Bank seemed to be in the offing. The Central Bank had therefore to ensure the stability of the system and also ensure that the Seylan Bank did not collapse, said Governor of the Central Bank, Ajith Nivard Cabraal at a media briefing held yesterday at the Central Bank Auditorium.

Due to the steps taken, the whole system is stable, in addition to which the Seylan Bank is now administered by a competent, proven team of professionals of the highest caliber. The board of directors comprise Eastman Narangoda, former CEO of the National Savings Bank, (Chairman), Lalith Withana , Chartered Accountant, Nihal Jayamanne , Presidents Counsel and Neomal Gunawardane , Chartered Accountant/ Attorney at Law. The incumbent CEO of Seylan Bank , Ajith Pasquel continues as CEO.

In answer to a question from the media, Cabraal added that the present arrangement where Seylan is administered through the Bank of Ceylon will continue as long as it is necessary. No fixed term has been decided for the present.

He added that the Central Bank is not responsible for the operations of Golden Key as it not a registered company to accept deposits under the Finance companies Act and added that a number of amendments to the Finance Act are under consideration by the Consultative Committee as present." Taking of deposits is not an illegal act, many organizations do so for example Elephant House on their empty bottles and Dialog and SLT when providing telecom facilities, to name a few.

The Central Bank is presently carrying a number of investigations into various organizations and individuals ,however it cannot be divulged due to the secrecy clause under which they are bound. Information on any investigation into Golden Key was not divulged.

Depositors and other banks were given an assurance that Seylan is without any problem and that they could transact business as usual, in addition to which the temporary ban on trading of shares was also lifted and business is back to normal. and the financial system enjoys total stability. In conclusion he added that the decisions taken were after much deliberation and consideration of all aspects in question, it was by no means a decision taken overnight in haste.