LTTE operated 11 bank branches in North before its defeat

The LTTE operated 11 bank branches in Northern Sri Lanka with claims of prompt service and various loan facilities prior to its annihilation in May last year.

Police investigations say that the LTTE had operated these branches of the Eelam Bank mainly in the East and in the Wanni in the North. The entire Eastern Sri Lanka was captured by security forces from the LTTE in July 2007.

"The Bank of Tamil Eelam shows the way to your prosperity and the Economic Development of the Tamil Homeland," a bank's advertisement recovered recently said. Three of the branches were at Kokkaticholai in Batticaloa, two at Sampur in Trincomalee and five other branches in Wanni.

However, these banks ceased to function following the liberation of the East and the gradual fall of Wanni areas held by LTTE, with the police unaware of the fate of several millions of rupees deposited by the people.

According to the Sri Lanka's Central bank Governor Ajith Nivard Cabral, the north has been an untapped market for years due to the war.

"We are seeing a lot of interest from financial companies (after the war) to expand into that area," he told a gathering. The rebels ran their own banking system with 11 branches before their defeat, an official statement said.

Since the bloody conflict ended last May, the central bank has allowed 73 national bank branches to open in the north, an official statement said here.

State owned banks currently offer mobile services to about 3,00,000 people who were displaced during the final stages of the conflict and live in government-run camps.
Meanwhile, the global banking giant HSBC opened a branch in Jaffna last week, the first foreign bank to do so since the end of the Eelam IV war.

Investigations have claimed that in the past large sums of money had been remitted to the "Eelam Bank" by the Tamil Diaspora, a newspaper report said recently.
In December last year Sri Lanka's Criminal Investigation Department arrested the Finance Division head of the Tamil Rehabilitation Organisation, an LTTE front organisation, in Jaffna.

He is alleged to have provided millions of rupees to the Tiger rebels for their war efforts, officials said.

Investigations have claimed that he had provided TRO funds to slain LTTE leader Velupillai Prabhakaran, its political head S Thamil Selvan and several key members.
The suspect was arrested by a special team of officers in Chunnakam in the north where he lived with his wife.

In November 2008, the Central Bank of Sri Lanka  had confiscated the frozen funds of the suspected LTTE front TRO while warning the general public against any financial association with the outfit.

Meanwhile, The Central Bank is planning a USD 100 million Re-finance Fund for the Jaffna Peninsula, which is seeing an economic revival after a highway to the South was opened with the end of a decade long conflict, the Central Bank revealed.

According to the Bank sources, the Northern Regional Development Fund will channel loans to businesses in the region through existing Banks.

A three billion rupee re-finance scheme for small loans called "Vaddakin Vasantham", or Northern Revival which was set up by the Central Bank, has already seen a flood of loan applications.

The new Fund is being started following request made for a special development bank for the region at a forum attended by Central Bank Governor Nivard Cabraal last month in Jaffna.

The Central Bank is also looking for space to set up a regional office in Jaffna. Banks are rushing to open branches in the North with the conclusion of the war.
The Central Bank has so far given the nod for 91 Bank branches and extension offices to be opened in the region, Bank sources added.