Stimulus package timely
by Lalin FERNANDOPULLE
The financial sector experts said that the stimulus package
introduced by the Central Bank for financial institutions is a timely
move to bolster confidence and ensure stability of the financial sector
in the country.
Financial institutions urgently needed assurance to convince its
investors of the safety of registered companies at a time of
crisis.There has been panic among depositors over fears about the
financial status of companies. The stimulus package was introduced by
the Central Bank to protect and ensure stability of financial companies
that may collapse due to eroding investor and depositor confidence
triggered by the major financial scams. Lack of confidence and
uncertainty about the stability of financial institutions in the country
have been increasing in the past weeks due to mismanagement resulting in
premature withdrawals and companies losing its asset base. Assistant
Governor, Central Bank, Dr. Uthum Herath said it is not the external
factors but the lack of good management that has caused problems for the
financial sector.The stimulus package will help build confidence and
restore stability of businesses. The Central Bank recently intervened to
rescue Seylan Bank by taking over the management to restore trust and
continuity of the businesses. Director General Sri Lanka Accounting and
Auditing Standards Monitoring Board, Ajith Ratnayake said not adhering
to proper accounting and auditing standards is one of the primary
reasons for such problems in the financial sector.
"Certain institutions manipulate the financial statements to convince
shareholders of making profits. Investors are taken for a ride by such
false reports and when the real status of the company is exposed it
could be disastrous", he said.
Partner Gajma and Co. N. R. Gajendran said intervention of the
Central Bank is vital to manage crisis and give assurance that the money
of depositors are safe. "Drop in confidence is a worldwide issue and
what is required is building confidence and managing risk", he said.
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