3 ailing finance companies to be liquidated
This week’s cancellation of the licence of the ailing Central Investment and Finance Ltd (CIFL) appears to be the first step towards liquidating a total of three troubled companies and partly settling their depositors, informed banking sources said.
The part-repayments to depositors of CIFL, the Standard Credit Finance Ltd (SCFL) and City Finance Corporation Ltd is to be met from an emergency fund, most likely the Central Bank’s Sri Lanka Deposit Insurance Scheme, the sources said.
The option, for many years, to find investors to resurrect these failed companies has failed as no financially, credible investor has been found, the sources said.
After the licences of the other two companies are also cancelled, liquidation of all three will proceed after which the repayments will be made under a formula that has been worked out.
A spokesperson for the CIFL Depositors Committee said they were disappointed by the Central Bank which had in October 2016 announced that under a repayment scheme, depositors will get part payment before 31 December 2017 and the balance with interest within a reasonable period
“There are investors who can revive the company,” he said, adding that depositors were vehemently opposed to the latest move.
In August this year, Central Bank Governor Indrajit Coomaraswamy told reporters that the bank would soon put in place resolution plans for three defunct finance companies. A resolution mechanism for this purpose is to be introduced soon.
In the case of several depositors at SCFL who had converted their deposits to shares in the stock market, on the advice of the earlier Government, steps are expected to be taken to reconvert these back to deposits, for the purpose of settlement. The Business Times, over the years, has received and published several pleas from depositors, many ailing, for a quick return of their hard-earned deposits.