CB cancels Standard Credit Finance licence

The Monetary Board of the Central Bank yesterday announced the cancellation of the licence issued to Standard Credit Finance Limited (TSCFL), with effect from July 25, 2018.

TSCFL, a licensed finance company, licensed under the Finance Business Act No. 42 of 2011, was facing a liquidity crisis since 2008.  The depositors of the company have been unable to withdraw their money over the last 10 years. 

The Central Bank said all efforts made to revive the company through different strategies have failed and the continuity of the current status would be further detrimental to the interest of the depositors and other stakeholders of the company.  “Accordingly, TSCFL is not permitted to engage in finance business under the FBA with effect from July 25, 2018,” the Central Bank said.  

Further, the Central Bank Supervision of Non-Bank Financial Institutions Department Director has decided to cancel the Certificate of Registration of TSCFL as a registered finance and leasing establishment, under the provisions of  the Finance Leasing Act No. 56 of 2000 (FLA), with effect from  July 25, 2018. 

Accordingly, TSCFL is not permitted to grant new finance lease facilities under the FLA with effect from the same date.

The Central Bank said the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS) will take the necessary actions to pay compensation to the insured depositors of TSCFL, up to a maximum of Rs.600,000 per depositor, as per the regulations of the SLDILSS.  

Further, the depositors may be able to recover part of their remaining deposits 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 stressed that legal action would be instituted against the responsible parties for the mismanagement and alleged fraudulent activities of the company. 

This is the second instance in the recent times that the Central Bank cancelled the licence of a finance firm. The Central Bank last year cancelled the licence of Central Investment Finance PLC (CIFL).