Friday Sep 20, 2024
Friday Sep 20, 2024
Saturday, 18 January 2014 00:05 - - {{hitsCtrl.values.hits}}
Dr. De Silva told the Weekend FT that the sudden focus of the Central Bank in urging the sector to consolidate by mergers and takeovers should be seen in the light of chequered reputations of certain finance companies that were involved in controversial deals as that between The Finance Company and the National Savings Bank (NSB).
“This sudden surge of activity is suspicious. For the longest time the Central Bank kept denying there were any problems, they even ran full page ads on newspapers saying ‘politically motivated economic hitmen’ were spreading false stories to destabilise the economy. That is what they said. Now suddenly everything has changed. They have sent letters to chairmen of finance companies summoning them to a special meeting. The letter was sent on Thursday (16); their presence is ‘required’ on Sunday (19). Why the sudden change of heart?”
He also insisted that under the new measures introduced by the Central Bank, certain financially unsound finance companies could be taken over by State banks.
“I have heard that they are trying to flog The Finance Company to a State bank. This was the same company that overpriced its shares to Rs. 50 and sold it to NSB. It was I who protested and as they say the rest is history. Today the share is less than Rs.10. The losses of this company are mindboggling. They have not met any regulatory requirements of the Central Bank. Losses have grown over the last few years even when it was under the Central Bank restructuring process, even with handpicked directors. Now they are saying it will now be put under a State bank,” he charged.
He alleged that even though the Central Bank insists the finance sector is “hunky-dory,” there are many companies unable to pay their depositors.
“Who are they trying to protect? Are they trying to protect the owners of The Finance Company by bailing them out? So who are they trying to protect? Questions are going to arise.”
Dr. De Silva went on to say that troubled finance companies are headed by people with strong links to the Government, raising more questions over the Central Bank’s newly-unveiled plans.
“This sudden summoning of entire boards is highly questionable. Some financially unsound finance companies continue to take deposits and even floated an IPO. The Central Bank is aware of these issues. The Central Bank cannot turn a blind eye to these problems. They are answerable to thousands of depositors who cannot get their money back,” he stressed.
