
Highly complicated rules and regulations, minimum cash deposit requirements and other red tape is driving away ‘unlicensed lending companies’ from coming under the purview of the Central Bank (CBSL), opined Chairman of Tharuki Investment Pvt. Limited, Kottawa, W. G. Nihal Kumara (pictured).
He said that they did approach the Central Bank two years ago seeking registration but the feedback and the rules and regulations shun them away from obtaining a registration. “We then registered Tharuki Investment as a company and are paying all taxes including income tax.”
He said that government authorities should consider accepting a bank Guarantee from them instead of asking to place deposits when seeking registration. The CBSL should also relook at some of the regulations and make them more ‘friendly.’
He said that 60% of the customers to whom unregistered companies provided ‘loans’ could have never got that amount from banks or it would have taken months to get them approved due to collateral. “This is the reason that the customer came to us. Tharuki Investments offers credit from Rs. 5,000 up to Rs. one million and some customers whom we provided loans did not even have a Bank account. Most of my clients are from the Micro and SME sector.
Nihal Kumara said that they were not into leasing, pawing, accepting savings or fixed deposits. “We keep minimum collateral and provide credit for less than 4% interest. Also the customer who seeks credit from us could get it in less than two hours.”
He also said that the pay back from their customers too is pleasing. “If they fail to pay be we do not have seizers or thugs to get the money back but adopt to legal procedure.”
Today we have branches in Kottawa, Piliyandala, Ingiriya and Plawatte and Padukka. We hope to open two more in Gampaha and Meegoda this year.
“Tharuki Investments, is also keen to expand our footprint to the North and East and are looking for a local or foreign partner for this.”
Nihal Kumara who started as a Finance company employee in Matugama then started his own construction company 6 years ago, Tharuki Construction which is an ICTAD certified company.” We are engaged in real estate, design and construction of houses and also supplies raw material.”
He said that they are also working closely with the Ministry of Industries and Palmyrah Development Board and hailed the efforts by Minister Wimal Weerawansa to reopen the Valaichchenai Paper mill to re produce paper once again.
“There is a lot of development planned for the Valaichchenai paper mill facility including solar power generation and we are keen to diversify and invest in some of these proposed projects.”
In a bid to give back to society Tharuki Investments, also assist temples and schools to improve their infrastructure in the Matugama area by providing funds and material. caption:Chairman of Tharuki Investment, W. G. Nihal Kumara
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‘Unlicensed lending companies’ an important sector in economic fabric
Finance House Association’s Legal Advisor Shiranthi Gunawardena (pictured) said that so called ‘unlicensed lending companies’ too are an important sector in the economic fabric and the segment should not be driven away.
She said, “Firstly, I must say that finance companies over the years have done yeomen service to empower Sri Lankans to keep the economy going. They have provided credit to finance multiple businesses and provided leasing facilities to purchase vehicles which have helped entrepreneurs to rise up to the next level.”
“Not only that, but also it has lent its support to uplift the livelihoods of people and per capita income. Licensed Financial Companies are involved in serving borrowers who are generally excluded from the formal banking sector. The whole purpose is to gear un-bankable customers to bankable customers with better profiles.”
“Similarly ‘unlicensed lending companies’ too are servicing the customers who can’t obtain credit form the local banking system due to lack of collateral. It’s true that some ‘unlicensed lending companies’ are charging exorbitant interest rates and there should be a mechanism to monitor this.”
“However, I must say that ‘unlicensed lending companies’ are far better than traditional money lenders (Poli Mudalalies) who stoop to low levels to get their money back. Unlicensed lending companies are the quickest way to obtain credit for the masses,” she concluded.
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