Central Bank on last lap of resurrecting finance companies

The resurrection program launched by the Central Bank of Sri Lanka (CBSL) following the aftermath of the financial crisis that nearly brought down. The Finance Company PLC, (TFC) has created euphoria in the market again.

CBSL didn't have to infuse treasury funds to put the affected institution back on its feet. It came up with a restructuring strategy that has already shown remarkable progress.

The resource panel of ‘Taming the Beast in the Forest’ presentation at the Central Bank of Sri Lanka. From left: Ajith Devasurendra (Member, Expert Group on Financial Sector), Kamal Yatawara (Director/CEO, TFC) Aritta Wickramanayake (Member, Expert Group on Financial Sector), P. D. J. Fernando (Deputy Governor, Central Bank of Sri Lanka), P. Samarasiri (Assistant Governor, Central Bank of Sri Lanka), Nelumani Daulagala (Director, Dept. Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka)

This was revealed at an evening presentation conducted by the Centre for Banking Studies (CBS) of the CBSL themed 'Taming the Beast in the Forest: Experiences from the finance companies', referring to the state of affairs of the affected institutions that existed then.

TFC was the first to "Come out of the woods" which was a good sign for the financial sector.

Earlier this year TFC successfully concluded a public share issue which was mostly subscribed by the largest banks in Sri Lanka becoming a pivotal case study on how crisis-hit financial institutions can be revived for the betterment of the economy, stakeholders and financial services market.

It was pointed out that TFC, a 70-year-old financial company is now in business as a result of crisis resolution mechanisms, regulatory measures and prudent financial governance adopted by the CBSL.

The financial services sector, guiding and guarding a country's economy, can be equally sensitive and fragile in the phase of abuse and indifference. Sri Lanka saw the collapse of many strong financial institutions.

The most note-worthy achievement of TFC PLC is the resilience it showed due to the prudent policies adopted by the CBSL during the crisis and also when some international financing giants stumbled as a result of the global recession.

TFC with the intervention of the CBSL in the form of prudential regulation, restructuring of balance sheets, disposal of real-estate and converting portions of deposits in to equity so that loyal customers benefited by way of capital gains.

TFC was a focal point in building confidence among investors, depositors and other stakeholders in the supervisory and regulatory system of the CBSL and proved that the country has the capacity and resources to salvage institutions from acute financial crises.