The Monetary Board of the Central Bank of Sri Lanka (CBSL) has cancelled the licence of The Finance Company (TFC) from October 23, 2019.
The Monetary Board having considered the weak financial performance of TFC, took a number of regulatory actions under the provisions of FBA, from February 15, 2019, to safeguard the interests of depositors and other stakeholders of the company, a Central Bank media release stated.
The primary objective of the regulatory actions was to identify a potential investor for TFC within a reasonable time period. However, TFC has not been able to find an investor to date to revive the company.
It is important to understand that the revival of TFC depends on the availability of an investor who is willing to invest in the equity capital of the company. The Monetary Board instructed TFC to call Expressions of Interest (EOIs) from potential investors and to request such investors to submit their Business Restructuring Proposals to revive TFC.
However, TFC did not receive an EOI from any credible investor along with evidence for the availability of funds. The company is incurring a monthly loss of around Rs. 200 mn.
Hence, it is obvious that operation of the company in this manner will be further detrimental to the interest of depositors and other stakeholders.
The Monetary Board in terms of the powers vested under the FBA, issued a Notice of Cancellation of the Licence issued to TFC, from October 23, 2019 to safeguard the interests of depositors and creditors.
Any credible investor can submit an EOI along with proof of funds for capital infusion and a Business Restructuring Plan for the consideration of TFC and CBSL.
Interest due for deposits will be paid continuously to the depositors as per the CBSL directions.
All borrowers of the company are advised to pay their dues. Such borrowers are encouraged to pay their dues via bank accounts designated by TFC or to the nearest TFC branch.
They should also ensure to obtain receipts for the repayments they make.
The deposit insurance and liquidity support scheme will also safeguard the interest of all depositors to a maximum of Rs. 600,000 per depositor, which will cover 94 percent of the TFC depositors.
Depositors may contact the Department of Supervision on Non-Bank Financial Institutions of the Central Bank of Sri Lanka through 0112 477 573, 0112 477 229, 0112 398646, 0112 398733 or 0112 477 504 and [email protected] for further clarifications, the release further stated.