CB comes under barrage of criticism over failing finance companies
View(s):The Central Bank (CB)’s handling of failing finance companies came in for heavy criticism at the meeting of the Cabinet Committee on Economic Management (CCEM) recently. This matter was raised during the discussion on ways and means to establish the Finance Institution Restructuring Agency (FIRA) in accordance with the 2016 budget proposal, official sources revealed to Business Times. The CB has been blamed for delaying investigations into failing finance institutions, a senior official said adding that it was pointed out that the bank’s supervisory capacity was insufficient.
It has been directed to be more responsible on supervision and more vigilant on the status of the financial institutions in the country, he said. Under the 2016 budget proposal the FIRA on the lines of the Resolution Trust Corporation in the US will be established shortly by the Finance Ministry to help failing finance companies to be recapitalized and their troubled assets to be taken over by this agency for purposes of restructuring. The ministry has nominated former CB Deputy Governor B.D.W. Ananda Silva to head the FIRA. The government will provide initial capital of Rs.10 million as equity and also issue a Treasury bond to the value of Rs. 25 billion with a tenure of 5 years for the FIRA.