Struggling finance companies to get fresh foreign capital infusion: CB

10 September 2016 12:04 am - 0     - {{hitsCtrl.values.hits}}

A A A

A number of foreign investors are currently in talks with the Central Bank with regard to injecting fresh capital into some of the struggling licensed finance companies, a Central Bank in a statement said yesterday while cautioning the public not to get misled by erroneous media reports on such companies. 
According to the statement, only a “few licensed finance companies” have confronted financial problems and they are under specific supervision of the Central Bank.
“The Central Bank will provide regulatory facilitation and arrange infusion of fresh capital from investors. A good number of investors with overseas links are in negotiation with the Central Bank,” the statement noted. 
Meanwhile, the Central Bank said it would not be issuing any new finance company licenses and, therefore, licenses of existing companies will have a high market value in the future which is a key factor encouraging new investors.
“Problems of these companies are not new as these have been revealed to the general public since mid-2008. 
While the Central Bank was able to resurrect a number of companies successfully, few other companies still continue in the process of resurrection at various stages since the recovery of some large bad loans given by these companies in the past is delayed due to legal complexities and non-cooperation of those borrowers,” the statement added.

The Central Bank said it had attached highest priority to resurrection of these companies and the latest initiative in this regard includes joint action by the government, Central Bank and Finance House Association (FHA) in launching a new policy to resolve financial problems of these companies. 
As announced in the Government Budget 2016, the Financial Asset Management Company (FAMC) is to be set up in due course to help these companies to recover and manage their non-performing loans with state support in line with a model adopted by East Asian Countries.  The FHA is proposed to help by arranging for leading finance companies and their investors to provide funding support to these companies for business operations in the interest of safeguarding and promoting the nonbanking financial sector as a whole. The Central Bank also said it has now set up a new “Resolution Division” to take all necessary measures to address financial problems of these companies expeditiously. 
This specialized Division will help the Monetary Board to implement necessary policy measures on a fast track basis. A new set of regulatory and supervisory measures will be introduced in due course in line with the above joint initiative. 
The examination and supervision methodology has already been revisited to assess the financial condition and the business models of the regulated entities by focusing on material risks to their future sustainability of businesses in place of the history-based assessment. In this context, the respective Boards of Directors will be directly responsible for early resolution of supervisory concerns over such risks,” the statement said. 
The Central Bank further said it was aware that certain parties who have the vested interest in taking over the management of these troubled companies or preventing recovery action on account of large loans defaulted by them are spreading such erroneous news for their personal and business interests at the expense of depositors’ interests.
“In fact, these are the parties who are directly responsible for mismanagement of funds of these companies in the past which led to current financial problems. “

 

 

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




Credentials of official raise controversy

Amila Ishan Kankanamge, the Government appointed non-Executive Director to Mo

How the SLAF killed the LTTE’s “Smiling Cobra” in an air strike

More than eleven years have passed since the war between the Sri Lankan Armed

Sri Lanka in CT Level 3, health experts

As Sri Lanka witnessed the highest number of deaths in a single day and with

How Covid-19 is further marginalising the vulnerable

Although the COVID-19 pandemic was initially described by many as a “great

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.