The Finance Company Depositors Union (TFC) said that a solution cannot be brought about with the proposed liquidation of the oldest finance company with over 80 years history.
Addressing a press conference yesterday one of the depositors, Hilary Fernando said that The Finance is now operating as a name sake company. Currently there are 145,000 depositors and their total assets are around Rs26 billion and over 60% of them are senior citizens.
The Central Bank announced that because successive governments could not find an investor to bail out the company the last resort was to liquidate it. The CBSL also proposed that all customers having less than Rs. 600,000 be settled first. “This is around 94% or 135,000 depositors.
“However the CBSL is mum about the other customers who account to about Rs. 15 billion.”
Union members pointed out that as soon as the Lalith Kotalawala Empire’s financial down fall started in 2008 the CBSL kept a tag of accounts and dealings of The Finance.
The members also pointed out that The Finance assets were invested largely on Sussex Education College and various other loss making entities. “The then CBSL monitoring unit should have steeped in and put a check on these problems would not have surfaced. In 2009 the CBSL appointed a ‘Board of Directors’ to safe guard the institution but their efforts were not successful. During this time TFC total assets amounted to Rs.36.7 billion and the total liabilities amounted to Rs.35.54 billion with positive value of Rs 1,427 million.
“Upon the written request of the executive directors of The Finance Company, a promotion was held in January 2019 and Rs.946 million worth of new deposits were brought it and this was carried out with the knowledge of Central Bank,” Secretary TFC Employees Union Shanaka Silva said.
On October 23, 2019, the Central Bank issued notice of cancellation of TFC license and then appointed board of directors which failed to secure an investor pursuant to the called of Expressing of Interest. (EOIs) “However to date this is not successful as over 20 investors who expressed interest mysteriously backed out.”
He said they are now currently talking to Senior Economic advisor to the Prime Minister Ajith Nivad Cabraal and are confident that solution could be brought about.
“At that meeting Cabraal stated that the policy of the government is not to close down companies like this and a proposal to revive TFC will be presented to the Prime Minister and President soon.
It is 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.
‘Name financial companies in crisis’
The Finance Company Depositors Union (TFC) officials 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 compsnies 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.
Due to that statement, the depositors are in doubt and in uncertainty and without knowing what the finance companies are many depositors are withdrawing their money.
In this situation the finance sector is placed in a risky situation.
Statements as such made by senior officials of central bank can cause severe damage to the entire finance industry.
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