Thursday Nov 14, 2024
Thursday Nov 14, 2024
Saturday, 16 February 2019 00:00 - - {{hitsCtrl.values.hits}}
The Central Bank yesterday said it has decided to take a host of regulatory steps to safeguard depositors of The Finance Company, including appointing a panel of experts to facilitate restructuring as well as possibly suspending acceptance of new deposits, restrictions on withdrawals and restricting loans.
The Finance Company PLC (TFC), a Finance Company licensed under the Finance Business Act No. 42 of 2011 (FBA), was severely impacted by the failure of a number of financial institutions within the group in 2008. Since then the financial status of the company deteriorated gradually and currently with severe liquidity issues, which need to be addressed, immediately, the Central Bank said in a statement.
Although, several efforts were made to identify prospective investors and to restructure the company, such efforts have not materialised yet. Thus the continuity of current status will be further detrimental to the interest of depositors and other stakeholders of the company.
The Monetary Board of the Central Bank of Sri Lanka (CBSL), at its meeting held on 8 February, having considered the weak financial performances of TFC, decided to take a number of regulatory actions, as temporary measures, under the provisions of FBA, with effect from 15 February 2019, with a view to safeguard the interests of the depositors and other stakeholders of the company.
Proposed regulatory measures include suspension of accepting new deposits, restrictions on withdrawal of deposits and restricting disbursement of loans and advances to facilitate the restructuring process of TFC.
In order to facilitate the restructuring process, a panel of experts in banking and finance has been appointed by the CBSL. The company shall continue to negotiate and finalise the proposals of prospective investors and the CBSL will facilitate TFC to proceed with suitable investors as per the applicable laws and regulations.
At the same time, all borrowers of the company are strictly advised to pay their dues. It is further expected that these measures will greatly assist potential investors of TFC and to ensure the safety and soundness of the financial system.
The depositors of TFC are further informed that the CBSL is taking additional measures and closely monitoring the operations of the company to protect the rights of the depositors. Interest due for deposits will continually be paid to the depositors as per the CBSL directions.
With the restructuring process, it is expected to improve the cash flows and facilitate the prospective investors and revival of the company. Attention is also drawn to the fact that the deposit insurance and liquidity support scheme will also safeguard the interest of all depositors, to a maximum of Rs. 600,000 per depositor, which will cover 93% of the depositors in full.
Therefore, the depositors are kindly requested to cooperate with the CBSL in this regard. The depositors may contact the Department of Supervision on Non-Bank Financial Institutions of the Central Bank of Sri Lanka through 0112 477 573, 0112 477 229, 0112 477 504 or [email protected] for further clarifications.
