The Finance saga: Investor submits fraudulent documents

The Central Bank (CB) had received fraudulent financial documents from an investor who was looking to restructure the troubled finance firm, The Finance Co. (TFC) as the firm’s licence is due to expire by end of this month. 

“There was one investor who came in. However, that party submitted fraudulent documents with the CB. When we asked for proof of funds, they submitted a bank statement and when we went to the bank to confirm the bank statement, the bank informed us that it was a fraudulent statement,” CB Governor, Dr.  Indrajit 
Coomaraswamy revealed. 

The CB issued a notice of cancellation of the licence granted to TFC to carry on finance business under the Finance Business Act No. 42 of 2011 (FBA) on October 23, 2019 as the firm is facingsevere liquidity issues.

TFC earlier in a stock exchange filing claimed that it was in discussions with three potential investors and therefore, it had asked the CB for more time to negotiate with these investors after the regulator issued the cancellation notice.

However, the CB clarified that there was no such proposals that were submitted with the CB. 

TFC was seeking a strategic investor/s who could invest US$ 125 million as a special private share placement to turn around the firm within two years.

Dr. Coomaraswamy emphasised that the CB welcomes if any credible investor emerges before the expiration of TFC’s licence. 

According to the Central Bank, 93 percent of TFC depositors are holding deposits below Rs.600,000 and hence they can be paid their full deposit through the Deposit Insurance and Liquidity Support Scheme, in case if the firm goes into liquidation.