New laws on the cards to prevent finance company mismanagement

The Government is to introduce new laws to prevent large-scale financial mismanagement and fraud that resulted in several Non-Bank Financial Institutions (NBFIs) in Sri Lanka going bankrupt or having their licenses cancelled sometime back. 

Prime Minister Mahinda Rajapaksa made this disclosure during a meeting with Central Bank officials recently to address concerns of The Finance Company (TFC), which had its license cancelled last month.

The Central Bank has insisted that license cancelation was necessary as TFC had not been able to find a credible investor even though several rounds of proposals had been called, the last being in January of this year.
As a prompt response to the Prime Minister’s call, 147,000 disgruntled depositors of the now defunct ‘The Finance Company ‘will be getting their compensation soon under the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS).
The compensation payments to the depositors of ‘The Finance Company PLC’ under the SLDILSS subject to a maximum amount of Rs.600,000 per depositor commenced on 07.06.2020 through 63 branches of the People’s Bank island wide, the Central Bank announced in a media release. 
The funds required for making compensations to approximately 147,000 depositors whose eligibility has been confirmed by The Finance Company PLC have already been allocated from the SLDILSS. 
Accordingly, 19,279 depositors have obtained their compensation payments from the People’s Bank as of 12.07.2020 and Rs. 5,175,336,249.68 (approximately Rs.5.175 billion) has been paid to such depositors. 
However, it is observed that a considerable number of depositors have not yet been obtained their compensation payments. 
Therefore, the Central Bank of Sri Lanka hereby informs all the depositors whose eligibility has been confirmed by of The Finance Company PLC, who have not yet collected their compensations to obtain the said payments from the People’s Bank. (BS)