Friday, 20 September 2019 06:13

Central Bank cancels TKS Finance Limited licence

The Monetary Board of the Central Bank has decided cancel the licence issued to TKS Finance Ltd under the under the Finance Business Act, No. 42 of 2011 (FBA) carry on finance business with effect 19th September 2019.

TKS Finance Limited (TKSF), a Licensed Finance Company under the Finance Business Act,, has continuously been violating/contravening the provisions of the FBA and several Directions and Rules, Central Bank said.

Financial condition of TKSF is not satisfactory due to deficient capital level, poor asset quality, continuous losses and failure in repaying depositors’ money on demand or at maturity, etc, CB added.

Despite several time extensions granted to TKSF by the Monetary Board to comply with the provisions of the FBA and Directions and Rules issued thereunder, no satisfactory progress was made in order to revive the critical condition of TKSF and to comply with such provisions, directions and rules.

Considering such serious concerns prevailing at TKSF, the Monetary Board took numerous regulatory actions, including imposing maximum ceilings on deposits and borrowings, suspension of accepting new deposits, suspension of granting new loans and advances and restrictions on investment activities.

However, since there was no satisfactory progress at TKSF even after such regulatory actions were taken, the Monetary Board issued a notice of cancellation of the licence issued to TKSF on 10th July 2019 and thereafter decided to cancel the licence.

Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) will take necessary actions to pay compensation to the insured depositors of TKSF up to a maximum of Rs. 600,000/- per depositor as per the regulations of the SLDILSS.

Further, depositors may be able to recover part of their remaining deposits through the process of liquidation subject to the regulations relating to priority of claims in a winding up of a finance company.

(LI)

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