The Central Bank yesterday said it has given notice of cancellation of the license issued to the liquidity-hit The Finance Company PLC (TFC) with effect from October 23, 2019, to safeguard the interests of depositors and other creditors.

TFC, a former Ceylinco Group company which has been in operation since the1940s, wasn't able to find a credible investor to inject much-needed capital to the company following the fall of the Ceylinco Group in 2008.

Since then, the company was under several caretaker director boards appointed by the Central Bank with the task of reviving it, at which they miserably failed.

Previously, the Central Bank had taken a number of regulatory actions against TFC under the Finance Business Act. No.42 of 2011, which included, the suspension of accepting new deposits, withdrawal of deposits and disbursement of loans and advances.

“The primary objective of the regulatory actions was to identify a potential investor for TFC within a reasonable time period. However, TFC has not been able to find an acceptable investor to date to revive the company,” the Central Bank said in a statement.

The statement also stressed that the revival of TFC entirely depends on the availability of an acceptable investor who is willing to invest in the equity capital of the company. The Monetary Board of the Central Bank had instructed TFC to call for expressions of interest (EOIs) from potential investors and to request such investors to submit their business restructuring proposals to revive TFC.

However, TFC was not able to receive an acceptable EOI from any credible investor along with evidence for the availability of funds.

Meanwhile, the Central Bank statement said TFC is incurring an Rs.200 million monthly loss.

“Hence, it is obvious that the operation of the company in this manner will be further detrimental to the interest of the depositors and other stakeholders,” it added.

For the year ended March 31, 2019, TFC made a net loss of Rs.4.5 billion, expanding its losses 153 per cent from a year ago. The accumulated losses of the firm rose 20 per cent to Rs.26.8 billion.

As of June 30, 2019, the TFC’s total assets fell to Rs.10.8 billion from Rs.12.4 billion three months ago while the accumulated losses rose to Rs.27.8 billion.

As of the same date, the firm had a negative net asset value per share of Rs.124.99.

Meanwhile, despite the notice of cancellation of license, the Central Bank said any credible investor can still submit an acceptable EOI along with proof of funds for capital infusion and a business restructuring plan for the consideration.

The Central Bank also stressed that the cancellation of the license will not have a bearing on TFC paying the interest due for deposits. At the same time, all borrowers of the company were strictly advised to pay their dues.

The Central Bank further drew attention to the fact that the deposit insurance and liquidity support scheme will also safeguard the interest of all depositors to a maximum of Rs.600,000 per depositor, which will cover 94 per cent of the TFC depositors in full.

The depositors could contact Department of Supervision on Non-Bank Financial Institutions of the Central Bank of Sri Lanka through ‘0112 477 573’, ‘0112 477 229’, ‘0112 398646’, ‘0112 398733’ or ‘0112 477 504’ and ‘[email protected]’ for further clarifications.