More finance companies keen to enter fray
Charumini de Silva
The country’s financial industry has rebound strongly contributing to
the economy significantly. Several local and foreign finance companies
are keen to establish finance companies in the country.
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The Central Bank |
These companies have applied for licences to set up themselves as
Registered Finance Companies (RFCs) from the Central Bank.
This shows that the confidence level of the public is high. The
Central Bank is in the process of evaluating these applications, the
Central Bank said.
The Central Bank is confident that all the RFCs will get listed in
the Colombo Stock Exchange (CSE) by the end of the month in fulfilling
the regulatory requirement. Apart from the few finance companies that
underwent a liquidity crisis, which are now observed by the managing
agents, all the other RFCs will meet the deadline.
The Central Bank said with RFCs being listed in the CSE there will be
a close observation about these companies from the Central Bank as well
from the Securities and Exchange Commission of Sri Lanka (SEC). This
will help the financial industry to demonstrate its transparency.
The RFCs which entered the capital market through an introduction
will gradually participate actively trading the shares. Although the
majority of the RFCs will not participate actively, in the long-term
these companies would be active participants in the CSE as they are keen
in raising capital for their expansion projects.
Bartleet Mallory Stock Brokers Managing Director R.Muralidaran said
the prime reason for the RFCs which cross the threshold to the stock
market through an introduction is that there is inadequate float and the
lack of market liquidity.
The market assigns a discount for this type of lack of liquidity. The
regulators must see that the minimum free floats are met at introduction
(25 percent for Main board and 10 percent for Diri Savi board) and
maintained accordingly.
Also some clear guidelines on the share reference prices on these
introductions would add value to the investing public. “We feel the
shares are relatively tightly held.
“To form an opinion we need to make sure that the listings have
adhered to CSE regulations about reference prices and minimum floats”.
“There are plenty of finance companies, which do not meet the
requirements of float,” he said. |
