The Employees’ Association of The Finance Company (TFC) says that the Central Bank has made a big blunder by cancelling the Finance Business Licence of ‘The Finance Company PLC. TFC is the oldest finance company with over 80 years history.
“We will now make fresh representations to the President and Prime Minister/Finance Minister in a bid to get the licence active once again,” Union Secretary Shanaka Silva said.
It is surprising and unfair for the Central Bank to close down a company which was managed by the Central Bank for over 10 years. “If the Central Bank wanted to close down the company it should have done so in 2009 where the company’s assets were at a positive value. Therefore the Central Bank is directly responsible for the downfall of the company,” he accused.
Currently there are 145,000 depositors and their total assets are around Rs 26 billion and over 60% of them are senior citizens. “Under the ‘payback’ system by the CBSL it will take a long period to get our money back.”
Funds from Liquidity Support Fund set up in 2010 by then Central Bank Governor, Ajith Cabraal too could have been used to bail out the TFC and settle some of the depositors. Then the liabilities of the TFC will be low for a new investor to take over.
He said this option is still there and also the TFC can be even merged to another financial institution. The closure of the company by CBSL is not the answer to it.”
He also said that closing down a finance institution also sends negative messages to depositors of other financial institutions and also investors.
He also lashed out at a current Deputy Governor of Central Bank on his statement that most of the Finance Companies operating in Sri Lanka are not stable.
“This CSBL Deputy Governor was quoted in media stating that out of the 42 licensed finance companies 20 are in severe financial crisis. “This statement gives a negative impact for the industry and should be corrected or the 20 companies should be named.”
This Deputy Governor had also said that 94% of the funds of TFC depositors can be repaid by closing down the company. This is also false and misleading. Statements as such made by senior officials of central bank can cause severe damage to the entire finance industry.
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