Sri Lanka CB to start payments to CIFL depositors from Aug 27
ECONOMYNEXT – Sri Lanka’s central bank said compensation payments to depositors of Central Investments and Finance Ltd, a failed non-bank finance company will begin from August 27, 2018.
"Therefore, eligible depositors are kindly requested to wait patiently until CBSL officially inform the collection of their payment," the Central Bank said in a statement.
The regulator cancelled the license of CIFL on March 03, 2018.
On July 25, the monetary board also cancelled the license of The Standard Credit Finance Ltd.
Compensation for depositors of the failed firm will also be paid under Sri Lanka Deposit Insurance Scheme Regulation No.01 of 2010, the central bank said.
Several Sri Lanka non-bank lenders accumulated large gaps between deposits and assets over the past decade or more, because they were not immediately liquidated when regulatory capital fell below threshold, due to so-called ‘regulatory forbearance’.
However a deposit insurance fund was set up, which can compensate small depositors when a finance company fails.
Rules for immediate non-discretionary liquidation, ensures that both small and large depositors will make minimum losses and the burden on the deposit insurance fund will also be lower, analysts say. (Colombo/Aug27/2018)