13 Sri Lankan finance companies collapse under liquidity issues

13 Sri Lankan finance companies collapse under liquidity issues

7 April 2019 01:33 pm

The International Monetary Fund (IMF) revealed in a recent report that out of the 46 licensed financial companies in Sri Lanka, 15 are presently facing liquidity issues, with six at a high level of distress with Non Performing Loans ranging from 50 to 90 percent.

However the Central Bank disclosed 13 registered finance companies out of 43 have collapsed. 

Administration and management of nine registered finance companies have been vested with the Central Bank and liquidated while two companies, United Trust & went on direct liquidation since 1988. 

More than 7,000 depositors had deposited around Rs 6.1 billion in the two finance companies, the Central Investments and Finance PLC (CIFL) and the Standard Credit Finance Limited (TSCFL) whose licenses were cancelled by the Central Bank last year. 

The repayments to the depositors under the Sri Lanka Deposit Insurance and liquidity support Scheme is now in progress, Central Bank said. 

The Criminal Investigation Department has filed a case at the Magistrate Court of Colombo against the responsible parties for the failure of the CIFL. 

Necessary action has been taken to pay compensation to the insured depositors up to a maximum of Rs. 600,000 for a depositor as per the regulations of the scheme. 

Depositors may be able to recover part of their remaining deposits in the process of liquidation of such companies, Central Bank said.