News
CBSL offers rescue package to CIFL and others
View(s):The Central Bank of Sri Lanka yesterday announced a rescue scheme for troubled licensed finance companies, just weeks after it was revealed that Central Investments and Finance PLC (CIFL) is in trouble.
Under this scheme, the CB may direct existing shareholders of a particular licensed finance company to bring in fresh capital, or invite a new investor to take a stake in the company by bringing in new funds, the regulator said yesterday.
It said that in certain instances, the CB might direct depositors to convert a part of their deposits into ordinary shares. This option was recently offered to the 6,000 depositors of CIFL. Under a CBSL-approved restructuring plan, the directors of CIFL were asked to convert 60 per cent of deposits to non-voting shares subject to the consent of depositors. The remaining deposits are to be repaid after a grace period of two years at a five per cent nominal interest rate. This proposal is yet to receive the approval of CIFL depositors.
The CB said its new Liquidity Support Scheme would come into immediate effect. To avail themselves of it, a licensed finance company would be required to submit “an acceptable business restructuring plan to the CB, and also meet the terms and conditions prescribed by the CB”.
These conditions would include stopping of salaries and incentive payments to the board of directors and key management personnel and reduction of administrative costs.
comments powered by Disqus