Fi­nance com­pa­nies to face tougher cap­i­tal re­quire­ments from July Ris­ing min­i­mum cap­i­tal ra­tios

Daily Mirror (Sri Lanka) - - LIFE -

If there was any le­niency en­joyed by the Sri Lanka’s fi­nance com­pa­nies on their cap­i­tal and dis­clo­sure re­quire­ments thus far, such will end soon as the sec­tor is set to come un­der a BASELLIKE reg­u­la­tory frame­work.

The new cap­i­tal reg­u­la­tions on li­censed fi­nance com­pa­nies, which will take the form of BASEL rules on banks, will re­quire the fi­nance com­pa­nies to grad­u­ally in­crease their cap­i­tal ra­tios from 2018 through 2021, said Fitch Rat­ings on a spe­cial note on the sec­tor ahead of the new rules com­ing into ef­fect from July 1.

Ac­cord­ingly, the tier I and tier II ra­tios of li­censed fi­nance com­pa­nies will in­crease to 8.5 per­cent and 12.5 per­cent from the cur­rent 5 per­cent and 10 per­cent re­spec­tively, ef­fec­tive from next month. „BASEL-LIKE model to in­crease min­i­mum cap­i­tal ev­ery year up to 2021 „Tier I and tier II ra­tios to in­crease to 8.5% and 12.5% from cur­rent 5%t and 10% „Fitch says higher cap­i­tal re­quire­ments will im­prove sec­tor re­silience „But says will add to cap­i­tal­iza­tion pres­sures for small-scale fi­nance firms

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