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Lanka to cut down number of finance companies

Sri Lanka is cutting down the number of finance companies to 20 from 58 at the end of last year while smaller banks are to merge with bigger counterparts or be acquired under new rules. Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal said there will be a reduced number of banks as a result of mergers and absorptions. he was making a presentation on the ‘Master Plan for the consolidation of the financial sector’ to bankers and heads of finance companies. The opposition and banking analysts questioned the rationale of the move, as to whether there was any political agenda behind and the urgency in which it is being pursued. The governor and his team were meeting heads of finance companies at separate meetings on these. Highlights of his presentation include besides reducing the number of non-banking financial institutions to about 20 from a current 58 strengthening at least five Sri Lankan banks to double their assets to Rs 1 trillion from a current Rs 500 billion. A few finance companies in the country have been grappling with crises in recent years stemming, initially, from the collapse of non-licensed Golden Key and its connected organizations in the then Ceylinco Group. Central Bank officials have said that at least 10 finance companies need new capital infusion while one is already under litigation. Cabraal said of the 20 NBFIs, three would be specialized in micro finance. Each NBFI will have an asset base of more than Rs 20 billion compared to the current status where just 10 have such assets while more than 40 NBFIs have less than Rs 8 billion in assets.

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PR Newswire