Mr. Janaka Ratnayake, Chairman of the MBSL group |
The Merchant Bank of Sri Lanka (MBSL) is the pioneer merchant bank in Sri Lanka and is regulated by the Central Bank of Sri Lanka. MBSL's major shareholder is the Bank of Ceylon, which is the largest bank in Sri Lanka and fully owned by the Sri Lankan government. Recently the Central Bank of Sri Lanka entrusted the restructuring efforts of The Finance Company (TFC) to the MBSL, which is fully equipped with a panel of professionals who posses the right skills and experiences and who have undertaken similar projects in the near past which include the Finance and Guarantee Company and the Ceylinco Savings Bank.
TFC was established in the year 1940, and is the 6th registered finance company in Sri Lanka.
Today TFC has established itself as the number one finance company in the country servicing millions of customers. The company has assets over of Rs. 35 billion, and a deposit base of around Rs. 25 billion in addition to over 100,000/- depositors. The Sunday Times spoke to Mr. Janaka Ratnayake, Chairman of the MBSL group to find out about the bank's plans behind the restructuring process of TFC.
"Our primary aim through the restructuring process of TFC is to restart its normal business activities which until know had come to a complete stand still.
In order to pay depositors you need to generate money, this has to be done by increasing deposits and lending activities. Therefore we have moved towards increasing deposits and initiating the lending activities of TFC and also we are in the process of increasing its recoveries. What we want to communicate to the stakeholders of TFC is to work towards protecting this organization", says Mr. Ratnayake.
We have remained resilient with regards to the world economic crisis mainly due to the size of our economy, which is less than a Fortune 500 company. In addition to this we have good regulators such as the Central Bank of Sri Lanka, The Security and Exchange Commission and the Insurance Board of Sri Lanka. What however affected us is the trust the general public placed in certain illegal deposit takers and unregistered finance companies, which ultimately left the general public helpless. Due to this the general public has adopted a general mistrust in banking finance companies, which led to large amounts of deposit withdrawals.
It is impossible for any banking or financial institution to face any form of excessive withdrawals on their deposits, as the maximum percentage of liquidity these institutions bear is as low as 20%. Borrowing short term and lending long term is what most banking and financial institutions are involved in. Therefore the future of these institutions largely depends on customer trust.
" TFC was initially handed over to the Lankaputhra Development Bank to be managed. At present it has finished its part of the task and has done a good job with regards to curtailing TFC withdrawals to a certain extent, and the MBSL will ensure to take TFC forward from this point. We are trying to regain the confidence that the general public has lost in TFC, as it is our duty as appointed stakeholders of this organization to do so. With time we are very confident that we will be able to restore the confidence that people had earlier placed in TFC", said Mr. Ratnayake.
The restructuring process of TFC by the MBSL will include such steps as salary revisions, minimizing certain privileges provided to the senior executives, retrenching a certain percentage of contract and casual employees mainly to safeguard the existence of its permanent employees, adopting certain cost cut measures such as reducing office working hours and cutting down on air-conditioning etc.
"Organizations that deal in accepting public funds should be accountable for their actions.
What went wrong for most of these unregistered organizations is the fact that they took public funds and mismanaged them at the cost of the public depositors. We are confident that TFC will begin normal business activities soon under our guidance. Our appointed management committee will be at hand to guide the affairs of TFC. We at MBSL believe in good corporate governance and transparency in all our operations. At MBSL we have built a result-oriented culture, which is based on trust and integrity, openness and performance, which has led to MBSL's success over the years and which will be the guiding light that will restore TFC to its former glory", assured Mr. Ratnayake. |
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