The sum of Rs.205.49 million invested by the Employees Provident Fund (EPF) Department of the Central Bank of Sri Lanka in the troubled The Finance Company has gone to zero,  the equity portfolio listed by the EPF as of 31 December 2019 revealed.

The market share of  The Finance Company has come to a standstill, mainly due to the suspension of the share trading of the company at Colombo Stock Exchange as the Monetary Board decided to issue a Notice of Cancellation of the License issued to TFC. This is a common fate not only for the Employees Provident Fund but also for other investors who have invested in the Finance company.

The Finance Company PLC (TFC) was severely impacted by the failure of a number of financial institutions within the Ceylinco Group in 2008. Since then the financial status of the company deteriorated gradually, leading to a severe liquidity crisis. Although several efforts were made to identify prospective investors and to restructure the company, such efforts have not materialized to a satisfactory level yet.

Accordingly, the Central Bank cancelled the License issued to The Finance Company, with effect from 23rd October 2019 to safeguard the interests of the depositors and other creditors.

However, Crisis hit finance firm, The Finance Company PLC (TFC) called Expressions of Interest (EOI) from prospective strategic investors for Equity Investment in the firm. This was resolved by the TFC’s Board of Directors during a meeting held on the 31st of December 2019.

In a letter directed to the Colombo Stock Exchange, the TFC mentioned that a minimum equity investment of Rs. 25 billion is required for the submission of EOIs.

However, during the press conference to discuss the monetary policy stance by the Central Bank of Sri Lanka, Deputy Governor H.A. Karunaratne told journalists that the license of The Finance Company (TFC) is likely to be cancelled, after the company failed to attract new investors.

“We have already taken a decision on The Finance from the Monetary Board, because it is not viable to continue the business. Therefore to resurrect the company there are a few options; one is either we need to see a new investor, or there should be injection of funds from either the Government or Central Bank,”

“Central Bank cannot inject any funds, and we have not seen any investor for this particular company. So, therefore, our option is to go ahead and cancel the license. But, right now we are looking to see whether the Government is willing to consider any other options, but if not we have to go ahead and cancel the license.” Karunaratne noted.

Speaking further he added that cancelling the license will assist many depositors, who are regularly requesting their funds.

“There are also a large number of depositors who are regularly requesting their funds. When you look at the total picture of The Finance, altogether we have 145,000 depositors, out of that 135,000 depositors have funds less than Rs. 600,000, and so if we cancel the license, we can help this 94% of the depositors.” Karunaratne added.

The Employees Provident Fund (EPF) is the fifth-largest shareholder of The Finance Company with 5,091,200 shares.