No threat from Fin Min agency says Governor

By Uditha Jayasinghe

Central Bank Governor Dr. Indrajit Coomaraswamy on Tuesday clarified the function and mandate of a new agency to be established under the Finance Ministry to assist troubled non-bank finance companies.

Cabinet recently approved a proposal by Finance Minister Ravi Karunanayake to establish a special agency to assist loss-making finance companies to make a turnaround. The proposal was severely criticised by economists as possibly undermining the Central Bank’s authority to regulate and monitor finance companies. There was also concern that public funds would be used to bail out badly managed finance companies and remove responsibility from the company heads.  

“We are working on trying to infuse capital into some of these companies and as much as possible have a market oriented private sector solution so there is no call on private resources but that it very much an ongoing process,” the Governor said in response to questions.   

“The idea is to take over some of the assets of distressed finance companies and to see whether those can be managed in such a way that can help support these companies. It’s kind of an asset management entity. Supervision and regulation will remain with the Central Bank. But the agency will act on behalf of the companies; it will not be a case of the Government acquiring these assets but to manage them.”