Central Bank seizes control of failing finance firm Nation Lanka Finance

The Central Bank announced the takeover of the operations of Nation Lanka Finance PLC (NLFP), initiating formal resolution proceedings, after repeated regulatory breaches and financial deterioration left the licensed finance company unable to meet the depositor obligations.

The Central Bank exercised its authority under the recently enacted Banking (Special Provisions) Act No. 17 of 2023, appointing P.W.D.N.R. Rodrigo as Administrator to oversee NLFP for a six-month period, effective July 4. 

The move follows months of non-compliance by the company, which has failed to improve its financial position, despite multiple extensions and regulatory interventions.

“The Central Bank, in its capacity as the resolution authority, has taken this decision in order to safeguard the interests of the depositors and creditors, as the current financial condition of the company poses a risk of further deterioration and necessary measures will be taken in the best interest of the depositors and creditors and to safeguard the stability and integrity of the financial system,” the Central Bank said in a statement.

NLFP, which operates under Finance Business Act No. 42 of 2011, has come under scrutiny for poor asset quality, inadequate capital, persistent losses and delays in repaying depositors. The Central Bank noted that despite the regulatory leniency, the company had made “no satisfactory progress” in resolving its issues.

As part of the resolution process, the appointed administrator will assume full control of NLFP’s assets, operations and governance. The stakeholders have been advised to make all payments to NLFP strictly through the company’s bank account and maintain proper records.

All stakeholders of NLFP are requested to co-operate with the Central Bank in this regard, the regulator added.