Sri Lanka to curb number of finance companies
View(s):Sri Lanka’s number of finance companies is to be restricted to around 25 from the existing 48 on guidelines to be announced early next year, official sources said.
These new guidelines have been devised in accordance with 2014 budget which proposed to merge or absorb finance companies with subsidiary finance companies and banks having subsidiary finance companies to absorb its finance companies.
According to Finance Ministry sources, only 20 finance companies have assets worth Rs. 20 billion and these companies are in a financially sound position.
Only 33 out of 48 licensed finance companies have been listed in the Colombo Stock Exchange although it is mandatory requirement of all these companies, a senior government official said.
The finance company listing of CSE will be strictly enforced under new guidelines; he said adding that companies that list will get a 3-year tax holiday at half the rate.
Finance companies facing liquidity problems are now conducting normal business operations, and the new guidelines will further strengthen those companies, official sources revealed.
These companies have undergone the restructuring process of the Central Bank including the appointment of managing agents, improving of balance sheets and the infusion of capital by finding new investors.
According to new guidelines to be announced early next year, the list of troubled companies will have to be published every quarter by the monetary authorities. Official sources said that no license have been issued to start new finance companies in 2013. A new directive was issued under the Finance Business Act aimed at improving governance.
Finance companies will need written approval of the Central Bank Monetary Board to form a subsidiary, sell whole or part of its business or to start a new business activity that is not directly related to finance business, hire purchase, leasing or pawning, these sources revealed.