Over 10,000 depositors of The Finance Company (TFC) yesterday appealed to the Government to carry out the additional payment of Rs. 500,000 from the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) under the Central Bank as pledged earlier and pave the way for the company to be resuscitated.
Independent Organisation to Protect TFC Depositors (Guarantee) Organiser Sarath Athukorala told reporters yesterday that following several rounds of discussions with top officials, including Prime Minister Mahinda Rajapaksa and State Minister for Money, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal, the Government had agreed to pay depositors an additional Rs. 500,000 from the SLDILSS, which operates under the Central Bank.
However, the funds, which were expected in March, were yet to materialise.
Athukorala explained that when the Central Bank made the decision to cancel the TFC licence in May last year there were about 145,000 depositors. However, once the first round of Rs. 600,000 was released from the insurance fund under the Central Bank that number dwindled to 10,072 depositors.
“A large number of TFC depositors had deposits of Rs. 600, 000 or less so when the first round of funds was released that brought relief to a significant number of people. Those who are leftover are people who have deposits larger than Rs. 600,000. But these are also not rich people. More than 85% of us are retirees. Even I had all my retirement funds at TFC after a 35 year career. Now we are really struggling financially as we have no income,” Athukorala said.
He appealed to the Government to push the Central Bank to release funds quickly. The depositors also argued that once the second round of Rs. 500,000 is released then the number of unpaid depositors would shrink by about 4,800, making it easier for TFC to be resuscitated with support from fresh investors.
“TFC is the oldest finance company in Sri Lanka and still has about Rs. 14 billion in estimated assets. Once the majority of depositors are paid off, it will be easier to find new investors and rebuild the company. This is also what the Government has indicated to us. We do not want to see this company close down completely,” he added.
In February, State Minister Cabraal told Parliament around Rs. 12 billion from the SLDILSS will be used to pay the depositors, which currently stands at Rs. 60 billion. The decision on the additional payment comes on a directive from Prime Minister Mahinda Rajapaksa, the State Minister said, adding there were plans to submit a Cabinet paper outlining strategies to restructure TFC.
TFC had earlier called for expressions of interest (EoI) on two occasions but failed to find a credible investor in both instances.
(FT)