Red light is on - depositors be cautious

According to Sunday Times of February 2, and Mirror Business of February 3, the Central Bank has disclosed that 20 out of 40 licensed finance companies collecting deposits from public are in reds, they are in difficulty to raise sufficient capital and facing liquidity issues.

This is a serious affair when you see that 50% of the country’s finance companies are in troubled waters.the news from the CB further says nearly 25% of the LFCS and specialized leasing companies have failed to meet with minimum capital adequacy requirement. The CB has so far not shed light on the names of those finance companies in trouble, perhaps with the opinion that naming them can worsen the situation to lead the depositors run to get their money back and by that the finance companies go into crash in no time.

It is said that today the boom is for vehicle leasing and housing loans and if the LFCS and leasing companies are struggling like this then it is a very serious situation and it will necessarily force the CB and the authorities to declare what those trouble facing LFCS by name as a caution for the public to re-frame from depositing their hard-earned money with those finance companies and avoid going to do leasing business with those leasing companies.

So far, thousands of poor men and women in this country have lost their money, and in some cases their valuable lives, got in to serious difficulties because of finance companies with big names calling for deposits from people of all walks of life and giving them great promises.

There are more than 15 court cases pending against the directors of crashed finance companies so far with no results expected in the near future. It is sad to say that the poor depositors are on the road with no hope for survival.

There is one pertinent question one can post to CB at this stage, whether they are going to let the poor people -- who cannot do any other business other than depositing their hard earned money in a finance company for a living -- to die on the road after losing everything they have earned in their life time? Can we allow the finance companies to continue like this and their directors to go “scot free” and sorry to say that is what happened so far.