By Dilrukshi Handunnetti

With the crumbling of the Ceylinco empire like a pack of cards, a key Ceylinco subsidiary has resorted to denying depositors their right to withdraw cash deposits at maturity by insisting on renewal.

Angry depositors told The Sunday Leader that The Finance Company Plc, one of the foremost finance companies with a grand history is now refusing to pay depositors at maturity and request investors to have their deposits submitted to a process of automatic renewal.

The Finance Company, according to depositors is not only refusing to pay upon maturity but has begun to instruct weary depositors to sign up renewal forms, according to the company officials, ‘as it was the only way to get the money back someday.’

In the event of an emergency, the company insists on a written request by depositors that are discussed at a specially appointed appeal board following which only a decision on the money is made. “The same applies to those with medical emergencies or personal needs such as wedding expenses or house construction related expenses,” a company official explained, claiming that the Merchant Bank of Sri Lanka (MBSL) was managing the Ceylinco companies, and hence the only agent to offer further explanations.

Appeal board

An angry depositor told The Sunday Leader that she had to submit the wedding invitations, hotel bookings and even ‘auspicious times’ offered by an astrologer to The Finance appeal board to have her Rs. 600,000 released to take care of her daughter’s wedding bills.

“It is my money and it has matured. I wanted the money to meet my daughter’s wedding expenses but it is a disgrace when I have to submit appeals. I should have no restriction in withdrawing my money,” she said.

A couple of others who had the same experience but whose requests were not even reviewed by the so called appeal board told The Sunday Leader they were summarily informed that the company has been so advised by the Central Bank, and as such, they were compelled to request depositors to reinvest.

“I was told to sign the reverse of the depositor’s certificate which automatically becomes a renewal request. I refused,” one despositor said. Yet another depositor, Devendra Tilakaratne lamented that he was told to renew his fixed deposit, as it was not possible to release funds. But the renewal, he said, was offered at a much reduced interest rate.

The company’s explanation to dozens thronging The Finance branches islandwide appears to be uniform. By way of explanation for slashing interest rates, investors are told that the global economic crisis and specially the problems within the Ceylinco Group have collectively resulted in a cash strapped situation.

“They further said they were acting according to government directives, Central Bank instructions to be specific, but refused to state the same in writing,” Tilakaratne added.

Show cause

Another angry depositor, Kanthi Mediwaka said that when she wished to withdraw her Rs, 800,000 at maturity, she was told to ‘show cause’ for a legitimate need for withdrawing cash and was advised to concede to an automatic renewal.

Yet another depositor whose Rs. 1.3 million is required for her to complete her house was instructed by a The Finance branch to submit an appeal citing all reasons together with supporting documents.

“It’s my money and my wish. I concede that the company must be really finding it difficult to pay with so many withdrawal requests. But that really cannot be a reason for penalizing any depositor, with legitimate reasons for withdrawing or not,” she insisted.

Yet another angry depositor relating his experience with the same company said that he was instructed to renew his deposit and ‘offered unslashed interest’!

“What are they saying? Getting interest payment on my money is my right, it’s part of our agreement. It is not some charitable gesture on their part,” he said.

When the matter was referred to MBSL Chairman, Janaka Ratnayake for clarification, he  told The Sunday Leader that they had Rs. 25 billion worth of deposits but Rs.4.5 billion have already been released to the depositors.  Since The Finance has given out thousands of loans, they are not in a position to repay the depositors at the time of maturity.

“But for deserving cases, there is a special appeal committee and there is a certain allocation to facilitate the deserving cases. It is not the fault of the company but the nature of this business,” Ratnayake said.

Interest slashed

In the meantime, depositors also complain that citing the global financial crisis and the equally bad crisis within the Ceylinco Group, the company has slashed the interest rate by a massive 10%. “They think we would still want to trust our monies with companies that refuse to pay at maturity,” she stated.

Besides, The Finance has also slashed interest rates offered for senior citizens by 1% besides the reduction by 10% on renewals. “The company cannot compel us to renew our deposits. The global financial crisis cannot be their scape goat either,” dejected depositors said.

 Investors/depositors now allege that those who did not deposit money in Golden Key and F & G would also be denied their money if the present trend continues. “This is now the unofficial policy of Ceylinco subsidiaries,” they said.

Some investors in The Finance said that some of them have already held discussions with lawyers on how to obtain their money upon maturity.