The Central Bank of Sri Lanka (CBSL) has appointed People’s Leasing and Finance PLC as Managing Agents of Central Investments and Finance PLC.
The appointment was carried out under section 25 of the Finance Business Act No. 42 of 2011 which empowers the CBSL to appoint a person to manage the affairs of a company where it is of the opinion that the company has been following unsound practices.
A release from the bank cited the “prevailing liquidity and management issues of CIFL” as the primary rationale for the appointment adding that People’s Leasing would be expected to improve the financial status of CIFL within a reasonable period of time under the close supervision of the CBSL.
The appointment of People’s Leasing is the latest development following a poor performance during the 6 months ended September 2013 when the company recorded a loss of Rs. 31 million, against a profit of Rs. 5.6 million in the previous year.
Jayanth Wickremeratne was subsequently removed from his position of CEO at CIFL. However the company was still forced to endure a run on deposits eventually leading to a cash infusion of US$ 12 million from Touchwood Group Chairman, Roscoe Maloney.
Maloney was reported to have assured the CBSL that the highest standards of management would be brought in to CIFL with a greater focus on microfinance and SMEs following his appointment to the Board of Directors
With the appointment of a managing agent, the CBSL directed the present Board of Directors of CIFL to extend their fullest co-operation to People’s Leasing in order to resolve the current crisis being faced by the company.
The Board of Directors will also be held responsible for the settlement of liabilities of depositors and other creditors prior to the appointment of the Managing agent.