Sri Lanka to liquidate Standard Credit Finance, compensate insured depositors

ECONOMYNEXT –Sri Lanka’s banking regulator said it has cancelled the licence of Standard Credit Finance Limited, a failed finance company, with depositors to get some compensation under deposit insurance and recover remaining claims during liquidation.

The Central Bank said in a statement all debtors of the company are required to pay their dues to the company through a bank account announced by the company.

“Central Bank of Sri Lanka wishes to emphasize that legal actions will be taken against the responsible parties for the mismanagement and fraudulent activities of the company.”

The statement said Standard Credit Finance Limited (TSCFL) had been facing a liquidity crisis since 2008.

“Depositors of the company have been unable to withdraw their money over the last ten years. All efforts made to revive the company through different strategies have failed.

“The continuity of current status will be further detrimental to the interest of depositors and other stakeholders of the company,” it said.

“Therefore, Monetary Board of the Central Bank has decided to cancel the licence issued to TSCFL with effect from 25th July 2018. TSCFL is not permitted to engage in finance business with effect from 25th July 2018,” it said.

The statement by the Department of Supervision of Non- Bank Financial Institutions of the Central Bank also said it has decided to cancel the Certificate of Registration of TSCFL as a Registered Finance Leasing Establishment under the provisions of the Finance Leasing Act No. 56 of 2000 (FLA) with effect from 25th July 2018.

“Accordingly, TSCFL is not permitted to grant new finance lease facilities under FLA with effect from 25th July 2018.”

The central bank said the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) will take necessary actions to pay compensation to the insured depositors of TSCFL up to a maximum of Rs.600,000 per depositor.

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“Depositors may be able to recover part of their remaining deposits in the process of liquidation subject to the priority of claims,” it also said.

(COLOMBO, 25 July, 2018)
 

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