CB to decide fate of 6 struggling finance companies
The Central Bank (CB) is ‘critically’ evaluating six struggling finance companies and will finalise a ‘decision’ on their fate before this year ends, a CB official said. This was revealed when the Business Times asked whether the CB will stop finance companies from mobilising public deposits, a move by former CB Governor Arjuna Mahendran which was met with stiff opposition by managements of these firms. The CB now governs 48 finance companies and in January took over the crisis-hit primary dealer Entrust and two of its finance company subsidiaries – Standard Credit Finance Ltd and Multi Finance PLC. According to the official the CB has about 10 firms that need ‘more direction’ but aren’t in trouble. However, some six firms aren’t that fortunate as they are faced with tough liquidity issues.
He added that the regulator is keenly studying what steps to initiate in terms of these six. “We will have to find partners for them or design some sort of restructuring plan for them. Meanwhile, Fitch Ratings has affirmed the ratings of People’s Leasing & Finance PLC (PLC), Central Finance Company PLC (CF), Melsta Regal Finance Ltd., HNB Grameen Finance Ltd, LB Finance PLC, Siyapatha Finance PLC, Senkadagala Finance PLC, AMW Capital Leasing And Finance PLC, Singer Finance PLC, and Mercantile Investment & Finance PLC. The official said that despite the CB conducing public awareness programmes through notice, posters and publications to inform the public of authorised financial institutions and to warn them of unauthorised persons/entities that engage in finance businesses, still a gullible set deposit their cash in these.