"Public needs a degree of patience and understanding…priority is to service interest," Sarath de Silva, chairman of Lankaputhra Development Bank said.

"Then we will have a structured repayment programme."

The Finance, where deposits topped 26 billion rupees before the crisis hit, accounts for about a quarter of sector assets, has a portfolio of property, leases and hire purchase.

The 69 year old firm started funding real estate projects a decade ago and now holds land and housing projects it values at over 5 billion rupees, officials said.

The firm had a maturing mis-match in its books.

"Three month, six month and one year short term deposits have been advanced for up to 5 and 10 year loans," says Lankaputra Development Bank’s chief risk officer Ravi Dassanayake, who started examining the firm's books on March 23.

The group's financial firms - especially those heavily exposed to property - ran into liquidity problems after Golden Key Credit Card Company, an unregulated firm which offered high interest rates, collapsed.

Lankaputhra says it is re-structuring the firm and four of its officers have been appointed to the board of directors.

"The original board is intact, but has been stripped of powers…the 'key executives' are now on the board," says De Silva, who was a former general manager of state-run Bank of Ceylon.

On March 20, Fitch Ratings downgraded The Finance two notches to a speculative BB+(lka) and put the rating on negative watch. It is not yet clear how the moratorium will affect the firm's credit rating.

Kamal Yatawara, a director, said the company's fixed deposit renewals fell to less than 40 percent causing a liquidity crunch soon after the Golden Key collapse shook public confidence in other Ceylinco owned deposit taking firms.

On Sunday March 22, De Silva had explained the problem to The Finance's 1,500 staff who man the firm's 40 branches, and sought their support to turn the company around.

"We told them to work for your survival and tolerate us (Lankaputhra) for the good of the company, industry and country," he said.

"We have given a bitter pill to staff. Perks and benefits have been suspended, we have told them to tighten the belt."

Officials have not yet decided whether to accept state liquidity support by swapping real estate for bonds at two thirds of their estimated value.

Nonperforming loans, a key indicator of a financial firm's health, are around the industry average of 6 percent.

"There are some misdirected investments contrary to central bank guidelines. Some of them are nonperforming…if they (management) have acted in bad faith we will report it to the central bank," says De Silva.

"One of the issues we are examining is these related party transactions."