The Finance Company depositors eligible to be paid Rs 500,000 each more

By Saman Indrajith

State Minister Money, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal told Parliament, yesterday, that the depositors of the failed the Finance Company (TFC) would be paid Rs. 500,000 each from the liquidity fund in addition to the Rs. 600,000 they had been paid under the Sri Lanka Deposit Insurance and Liquidity Support Scheme.

The Minister said so responding to a question raised by Opposition Leader Sajith Premadasa, who demanded to know from the government what measures had been taken to assist the aggrieved depositors of failed finance companies in the country, including TFC.

The Minister said that around Rs. 12 billion would be utilised to pay the depositors from the fund which currently stood at Rs. 60 billion. The decision on the additional payment had been made on a directive from Prime Minister Mahinda Rajapaksa, Parliament was told.

“We started the liquidity fund in 2010 with Rs. 1.1 billion when I was the Governor of the Central Bank and current Prime Minister Mahinda Rajapaksa was the President. Both the President and the Prime Minister have decided that the depositors of The Finance Company be paid Rs. 500,000 each more from this fund. It will be done soon with the approval of the Monetary Board and in consultation with the Central Bank.”

TFC had approximately 147,000 depositors at the time its licence was cancelled in May last year, but those whose deposits were Rs. 600,000 or less were paid the full amount.

Minister Cabraal said that a Cabinet paper had already been submitted for the restructuring of TFC and once it was approved, steps would be taken to find an investor for the company and settle all default payments to the depositors.

“A Cabinet paper has been submitted and depending on the decision of the Cabinet, we will move forward with the restructuring,” the Minister said.

He said that in addition to TFC, six other finance companies had collapsed, all during the previous administration.

“Before 2015, we took several measures to safeguard the sector. In 2010, we started the Deposit Insurance Fund and we also started the financial sector consolidation programme, under which we reduced the number of finance companies from 58 to 20 and strengthened the sector. Unfortunately, after 2015, that programme was shelved and the sector began facing numerous problems from then onwards.”

He said that the government’s priority was to safeguard the interests of the depositors and the decision to pay an additional Rs. 500,000 showed the commitment to them.

Minister Cabraal said that the Central Bank had cancelled the licence of TFC from May 22 after all efforts to revive the company through different strategie had failed.