Sri Lanka TKS Finance licence cancelled, liquidation to recover deposits
ECONOMYNEXT – Sri Lanka’s central bank has cancelled the licence of TKS Finance Limited with insured depositors to be compensated up to a maximum of 600,000 rupees each and balances to be recovered through liquidation.
A statement said TKS Finance (TKSF) Limited, a licensed finance company under the Finance Business Act, No. 42 of 2011 (FBA), has continuously been violating its provisions.
“Further, financial condition of TKSF is not satisfactory due to deficient capital level, poor asset quality, continuous losses and failure in repaying depositors’ money on demand or at maturity,” it said.
Despite several time extensions granted to TKSF by the Monetary Board of the Central Bank to comply with the provisions of the FBA, no satisfactory progress was made in order to revive the critical condition of TKSF and to comply with directions and rules.
The Monetary Board also took numerous regulatory actions, including imposing maximum ceilings on deposits and borrowings, suspension of accepting new deposits, suspension of granting new loans and advances and restrictions on investment activities.
The statement from the Department of Supervision of Non-Bank Financial Institutions that the Monetary Board decided to cancel the licence issued to TKSF under the FBA to carry on finance business with effect 19th September 2019.
“Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) will take necessary actions to pay compensation to the insured depositors of TKSF up to a maximum of 600,000 rupees per depositor as per the regulations of the SLDILSS,” it said.
“Further, depositors may be able to recover part of their remaining deposits through the process of liquidation subject to the regulations relating to priority of claims in a winding up of a finance company.”
It said all debtors of TKSF are advised to pay their dues to TKSF on time only through a bank account under the name of TKSF and maintain records for all payments to avoid litigations against the debtors of TKSF.
(COLOMBO, 19 Sep, 2019)