The Monetary Board of the Central Bank of Sri Lanka is establishing a new guarantee scheme for loan facilities provided by banking institutions to registered finance companies (RFCs) and specialized leasing companies (SLCs), in instances where RFCs and SLCs face unforeseen liquidity constraints.
In a statement on Wednesday the bank said in providing these guarantees, the Central Bank will assess the need for such guarantees for the applicant RFC or SLC and the quality of assets mortgaged or assigned in respect of obtaining a loan facility.
The Central Bank will also adopt expeditious procedures and impose certain conditions in respect of providing guarantee facilities under this arrangement, it said. Some RFCs and SLCs have been facing liquidity constraints since early 2009 due to a decline in inflow of new funds and the reluctance of some banking institutions to provide loan facilities to those companies.
As a result of this new scheme, such RFCs and SLCs will now be able to obtain loan facilities from banking institutions against their assets to enhance their liquidity position and to conduct their normal business operations, it said.
The bank said it expects this scheme will enhance inflow of funds to vulnerable RFCs and SLCs and relieve the liquidity constraints within a short period of time thereby enabling them to carry on their normal businesses and to contribute to the economic growth in the country. |
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