Friday, 10 July 2020 20:10

Finance companies hit by liquidity issues to be rescued via merges

Sri Lanka’s finance companies are experiencing financial difficulties, and the Central Bank is dealing with them strictly, Deputy Governor H. A. Karunaratne said.

It does not mean that the CB is going to close them down, he said adding that there were some companies that they can consolidate and in some cases CB can bring in fresh capital.

CB is also planning to call some companies to merge and. These programs are now on, he pointed out.

Senior Deputy Governor Dr. P. Nandalal Weerasinghe stressed that the Central Bank’s responsibility is limited to protect the depositors of failed financial institutions.

He added, the responsibility of protecting its employees is beyond their purview.

”If you look at what the central bank has done, we had about 55 financial institutions that were experiencing financial difficulties, but after the consolidation, liquidation and cancellation of licenses, we have about 41 now. This process will continue.” Dr. Weerasinghe said.

The corona virus outbreak and the resultant prolonged business disruptions will put additional pressure on Sri Lankan finance and leasing companies' (FLCs) earnings and asset quality, says Fitch Ratings.

(LIN)

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