ECONOMYNEXT – Sri Lanka’s central bank said it had decided to cancel the license of The Finance Company with effect from 23rd October 2019, after failing to find an investor to revive the troubled finance company.
A statement said the central bank’s monetary board took the decision “to safeguard the interests of the depositors and other creditors,” a central bank statement said.
But it said any “credible investor” can still submit an acceptable proposal along with proof of funds for capital infusion and a business restructuring plan to revive the firm.
“Interest due for deposits will be paid continuously to the depositors,” it said.
Under the deposit insurance and liquidity support scheme, all TFC deposits of up to 600,000 rupees will be repaid, which will cover 94 percent of all depositors at TFC in full, the central bank said.
TFC had 27.7 billion rupees in deposits at the end of June 2019. Its loan book was 3.7 billion rupees. The firm had 10.8 billion rupees in assets to its liabilities of 30.9 billion rupees.
In February 2019, the central bank limited the deposit and lending activities of TFC, which incurs a monthly loss of 200 million rupees. The central bank said that activities were halted to find a credible investor within a reasonable period of time.
A crisis in the Ceylinco Group in 2008 hit TFC with a severe liquidity shortage. Several attempts in the past to attract a potential investor to restructure the company did not materialize to a satisfactory level yet, the central bank said. (Colombo/Oct23/2019)