Central Bank cancels licence of failed TKS Finance Ltd
View(s):The Monetary Board of the Central Bank (CB) has decided to cancel the licence issued to crisis-hit TKS Finance Ltd (TKSF) with immediate effect from September 19 as there are no valid reasons for its continuation based on the crisis it is facing. The company is a Licensed Finance Company under the Finance Business Act (FBA).
TKS, the CB said in a media statement on Thursday, has continuously been violating/contravening the provisions of the FBA and several directions and rules issued thereunder. Further, the financial condition of TKSF is not satisfactory due to deficient capital level, poor asset quality, continuous losses and failure in repaying depositors’ money on demand or at maturity, etc.
“Despite several time extensions granted to TKSF by the Monetary Board to comply with the provisions of the FBA and directions and rules issued thereunder, no satisfactory progress was made in order to revive the critical condition of TKSF and to comply with such provisions, directions and rules,” the statement said.
“As the reasons/proposals given in the objections by the TKSF did not provide sufficient and substantial grounds to withdraw the notice of cancellation of the licence issued to TKSF, the Monetary Board, in terms of Section 37 of the FBA decided to cancel the licence issued to TKSF under the FBA to carry on finance business with effect from September 19, 2019,” it said.
The Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) will take necessary actions to pay compensation to the insured depositors of TKSF up to a maximum of Rs. 600,000 per depositor as per the regulations of the SLDILSS. Further, depositors may be able to recover part of their remaining deposits through the process of liquidation subject to the regulations relating to priority of claims in a winding up of a finance company. All debtors of TKSF are advised to pay their dues to TKSF on time only through a bank account under the name of TKSF and maintain records for all payments to avoid litigations against the debtors of TKSF. Therefore, depositors are kindly requested to co-operate with CB in this regard, the statement said..