Traffic light system to monitor health of local ‘fincos’
Former Central Bank (CB) Deputy Governor, Ananda Silva has taken up a new role at the Treasury heading an advisory group on troubled financial assets. It’s a pre-emptive strike group mooted by Finance Minister Ravi Karunanayake and in reviewing the 54 finance companies the group has strategised the creation of the Financial Assets Management Agency to restructure doomed finance companies. This agency is using the ‘traffic light system’ to monitor the health of finance companies, a Treasury official told the Business Times. According to this system, Green will be good, low risk and on track. “There’s no action required for these,” he said noting that the larger finance companies are in this sector.
Amber-Green denotes satisfactory but with some concerns. “But these are broadly on track,” the official said adding that the group on troubled financial assets found that a number of financial firms are in this category. Amber – Mixed category has medium risk firms and they have some significant concerns. “They are potentially damaging,” the official said. He added that in the Red segment which denotes problematic and high risk with serious concerns and threatening overall performance, there are about six firms. Several finance companies crumbled in 2009 as a result of the collapse of Golden Key, the tremors which are still felt today.