Finance Cos. could lose licence if merger proposals are not ready by 31st March
Finance companies (Non-Bank Financial Institution – NBFI) could lose their licence if they fail to submit their proposals to merge under new rules, before the March 31st deadline.
Industry sources said that the seriousness of this process has been communicated to the relevant NBFIs.
Separately, CB Assistant Governor C. J. P. Siriwardena told the Business Times that by this month end if the identified NBFIs (Category B NBFIs) haven’t submitted ‘concrete’ proposals pertaining to undergoing a suitable consolidation process, CB will ‘find’ a partner/s for them to merge with.
“All Category B NBFIs are to merge with local banks or Category A NBFIs (those who are stronger in their balance sheets like Central Finance), or merge among themselves, so that they fulfill conditions of the Category A NBFIs,” he said, adding that CB will ‘strictly’ adhere to this principle when finding partners. Initially, the local banks and Category A NBFIs will be given a time period of until 31st March, 2014 to identify partners of their choice from within the Category B NBFIs for such mergers/absorptions. There was positive response from the financial institutions and the CB met the Ceylon Bank Employees’ Union and clarified matters. “We are maintaining a close dialogue with the CB approved Panel of Auditors and other Consultants,” Mr. Siriwardena added.
“Discussions were held with the Securities and Exchange Commission and the Colombo Stock Exchange and with the Ministry of Finance and Planning on matters related to taxation.”
Due Diligence (DD) and Valuation of business is in progress, he said, adding that the CB has requested the Panel of Auditors (nine reputed companies) to conduct the due diligence and valuation of business of Category B NBFIs and all other Consultants to work with these Auditors. “These DDs and business valuations will be carried out using acceptable standards and will provide price guidance to buyers and sellers. By next Tuesday they will submit the DDs,” Mr. Siriwardena said.