Special Credit Guarantee Scheme:

Industrial Finance gets first CBSL loan

Ramani Kangaraarachchi

The Central Bank Sri Lanka has initially allocated Rs 120 million to provide loan facility to Registered Finance Companies in trouble under the Special Credit Guarantee Scheme. This is in order to improve their liquidity position and to resume normal business operations.

Central Bank Deputy Governor Priyanka Fernando said Industrial Finance Ltd has been qualified to receive the first loan implemented under this scheme.

The special Credit Guarantee Scheme was introduced by the Central Bank in January this year to help registered finance companies and specialized leasing companies which encountered severe liquidity problems.

Fernando said the Central Bank is actively encouraging the speedy utilization of the scheme and has confidence that the relevant RFCs (Registered Finance Companies) will be able to resume their normal business without delay.

The facility will only be utilized to commence the normal business and not to pay off depositors money. He said loans will be provided against such companies real estate and financial assets and companies also must submit an acceptable business plan to revive the company.

The Central Bank will oversee proper safeguard and maintenance of such companies.

The Central Bank introduced this scheme as some RFCs which have a number of assets in the real estate sector have found it difficult to sell those assets. Now the loan they obtain under the Credit Guarantee Scheme against those assets will help to tide over the temporary liquidity problems.

However, RFCs are expected to honour the obligations of depositors and creditors in the best interest of the country’s economy and all stakeholders, including depositors, lenders, customers and staff, he said.

So far the CB has received six applications and the panel of experts is carefully going through the documents.

People’s Leasing CEO GM D.P. Kumarage, the Managing Agent of the company said they have stopped taking new deposits and are having regular meetings to design a business plan.

He was optimistic of the revival of the finance company. However, the depositors will have to be patient and rebuild confidence about the company. Seylan Bank CEO Ajitha Pasquel said that indicators have shown an upward trend in real estate and the market is picking up. Seylan Bank is happy to supply loans through the working capital provided by the Central Bank, he said.