Swarnamahal Financial to pay depositors with sale of Rs. 425 m assets to SMB Leasing

• Failed finance company SFSP to use funds to settle depositors; licence to be cancelled thereafter and SMB Leasing to get fresh finance company licence

SMB Leasing PLC is set to buy Rs. 425 million worth of assets of Swarnamahal Financial Services PLC (SFSP), enabling the latter to settle outstanding deposits. 

The move follows the Central Bank, in principle, approving SMB Leasing (SMBL) to transfer Rs. 425.3 million to SFSP to settle outstanding deposits. In lieu of the transfer of funds, SFSP is to transfer the unencumbered title of three properties to SMBL. Thereafter, the licence of SFSP to conduct finance business is to be cancelled. 

The properties, which SFSP will transfer ownership to SMBL, are 195.86 perches of bare land in Gangatennwatte, Angunawala, Kandy; 46 perches of land and building at 10, De Alwis Avenue, Mt. Lavinia, and three shops at the Ja-Ela Realty Plaza. 

In mid-December, SMBL said the Monetary Board of the CBSL granted, in principle, approval to issue a finance business license upon completing the pay-off of public deposits and purchase of certain assets of a finance company at Rs. 425.3 million. 

This was under the master plan for Consolidation of Non-Bank Financial Institutions of the CBSL. 

In the mid-December disclosure, SMBL didn’t disclose the name of the finance company.