CB awaits govt. nod for liquidation of The Finance

The Central Bank (CB) awaits the government’s nod to move ahead with the liquidation of the troubled The Finance Company PLC (TFC) as the firm has consecutively failed to find any legitimate investor to infuse Rs.20 billion.

CB issued a notice of cancellation of licence granted to TFC under the Finance Business Act No.42 of 2011 (FBA), on October 23, 2019, as the firm is facing severe liquidity issues.

However, considering TFC’S objections during the 60-day notice period, CB allowed the firm to float an Expression of Interest (EOI) to find investors who could inject capital into the firm.

However, the CB Deputy Governor H.a.karunaratne said TFC has failed to find a legitimate investor.

Although, TFC received one proposal from a potential investor, the said investor had failed to submit proof of funds.

A similar incident was reported earlier as well with an investor submitting fraudulent financial documents to restructure TFC.

Hence, the Monetary Board has decided to liquidate the firm to repay deposits of 135,000 small depositors out of the total number of 145,000 depositors under the Sri Lanka Deposit Insurance and liquidity support scheme.

CB has sought the opinion of the Finance Ministry to move ahead with the liquidation.

However, the government is yet to respond to the CB’S query whether to bailout the TFC or to allow the liquidation.the CB is restricted from bailing out non-banking financial institutions by law.

TFC is currently losing around Rs.200 million per month. As of June 30, last year, TFC had recorded Rs.27.8 billion in accumulated losses. (NF)