The Monetary Board of the Central Bank cancelled the licence issued to the troubled finance firm Central Investment and Finance PLC (CIFL), with effect from yesterday.

Accordingly, CIFL is not permitted to engage in finance business under the Finance Business Act No. 42 of 2011, with effect from March 5, 2018. 

Further, the Director of the Supervision of Non-Bank Financial Institutions Department of the Central Bank of Sri Lanka has decided to cancel the certificate of registration of CIFL as a registered finance leasing establishment, under the provisions of  the Finance Leasing Act No. 56 of 2000 (FLA), with effect from the same date.  

CIFL has been facing severe financial problems over the last four years due to mismanagement and various fraudulent activities taken place in the company. The depositors of the company have failed to withdraw their money over the last four years.

The Central Bank said all efforts made to revive the company through different strategies have been failed and added that the continuity of the current status will further be detrimental to the interest of depositors and other stakeholders of the company.  

Since the notice of cancellation of licence on CIFL was issued last November, a group of CIFL depositors alleged that the move to close down CIFL and its group companies is to cover up the irregular and possibly illegal conduct of the Central Bank officials regulating these companies.
However, Central Bank Governor Dr. Indrajit Coomaraswamy vehemently denied such allegations, stressing that the banking and finance sector regulator has acted according to the regulations in this particular case.

He noted that legal action has been taken against the former CIFL Chairman Deepthi Perera for fraud, in addition to another fraudulent CIFL subsidiary, following the initiatives undertaken by the Central Bank, while several letters have been sent to the Attorney General’s Department and Criminal Investigation Department for legal action against the other parties as well.

Meanwhile, the Central Bank said following the cancellation of the licence, Sri Lanka Deposit Insurance and Liquidity Support Scheme will take the necessary actions to pay compensation to the insured depositors under the applicable laws and regulations. 

“Further, the depositors may be able to recover some of their dues in the process of liquidation, subject to the priority of claims. 

All debtors of the company are required to pay their dues to the company through a bank account announced by the company. 

The Central Bank of Sri Lanka wishes to emphasize that legal actions will be taken against the responsible parties for the mismanagement and fraudulent activities of the company,” the Central Bank said.