The Finance Company its license to operate as anon bank financial institution if the company fails to find a credible investor for capital infusion and submit a Business Restructuring Plan to resurrect the ailing finance company, Central Bank announced.
The Monetary Board in terms of the powers vested under the FBA, decided to issue a Notice of Cancellation of the License issued to TFC, with effect from 23rd October 2019 to safeguard the interests of the depositors and other creditors.
The Finance Company PLC (TFC), a Finance Company licensed under the Finance Business Act No. 42 of 2011 (FBA) was severely impacted by the failure of a number of financial institutions within the Ceylinco Group in 2008.
The Monetary Board of the Central Bank took a number of regulatory actions under the provisions of FBA, with effect from 15th February 2019, with a view to safeguard the interests of the depositors and other stakeholders of the company.
The regulatory measures included suspension of accepting new deposits, withdrawal of deposits and disbursement of loans and advances to facilitate the restructuring process of TFC.
The primary objective of the regulatory actions was to identify a potential investor for TFC within a reasonable time period. However, TFC has not been able to find an acceptable investor to date to revive the company.
Monetary Board instructed TFC to call Expressions of Interest (EOIs) from potential investors and to request such investors to submit their Business Restructuring Proposals to revive TFC.
However, TFC was not able to receive an acceptable EOI from any credible investor along with evidence for the availability of funds.
The company is incurring a monthly loss of around Rs 200 mn. Interest due for deposits will be paid continuously to the depositors as per the CBSL directions. At the same time, all borrowers of the company are strictly advised to pay their dues.
Attention is also drawn to the fact that the deposit insurance and liquidity support scheme will also safeguard the interest of all depositors to a maximum of Rs.600,000/- per depositor, which will cover 94 percent of the TFC depositors in full.
(LI)