Finance companies, supposedly the most penalised sector by the recent penal rate cut charged on default loans, have written to the Central Bank (CB) requesting to reconsider the new rule, Mirror Business learns.

However, much to the dismay of the finance companies, Central Bank Deputy Governor Ananda Silva said the Central Bank had no plans to lift the cap on the penal interest rates at the moment, which was brought down to 3 percent from a high of 48 percent per annum.

“We can review it but not immediately because we introduced it recently,” Silva stressed adding that they need a reasonable time to identify the impact.

Last July, the Central Bank asked the banks and licensed finance companies to bring down the penal interest rates charged on default loans not exceeding to 2 percent and 3 percent respectively.

However, a cross section of the large and medium-sized finance companies Mirror Business spoke to noted that there had been only a very little reduction so far and they need time to make changes to their systems to fully comply.

“Generally there has been a reduction. One should understand that we have to do lot of changes to our systems and method of calculation which are currently being done,” said Group Managing Director LOLC Group Kapila Jayawardena, adding that discussions with the regulator is currently progressing.

However the Central Bank’s Supervision of Non-Bank Financial Institutions Department Director H. M. Ekanayake said no finance company had so far informed them about technical glitches hindering them to comply with the new ruling.

“This is a Monetary Board decision and we have sent them letters. So, this is a mandatory compliance for all finance companies,” he explained.

Meanwhile Commercial Credit and Finance PLC CEO Roshan Egodage too expressing similar sentiments to LOLC’s Jayawardena told, imposing caps on penal interest rates is not good and should allow the market forces to operate with no influence.

Further, when asked of the compliance on the penal interest rule by the banking sector, Deputy Governor Silva said most of the banks had reduced their penal rates. “We have already checked them. Most of them have reduced,” he affirmed.