Financial Times

Warning against dubious finance companies
The Finance Houses Association of Sri Lanka says that in the wider national interest it is necessary to inform the public of dangers in investing in institutions which are not controlled by proper legislation to safeguard investors' funds.

"None of the directions, regulations and rules that registered finance companies must comply with, apply to companies that are not registered and they are free to act in any manner they please.

The public are not in any way protected by any of the regulations and therefore the public funds invested in such companies are at high risk although very lucrative rates of return are being offered by such companies," said association chairman Wigna Sellamuttu in a statement.

"Unfortunately the present legislation is not sufficiently stringent for action to be taken against such companies for soliciting funds from the public with no proper controls to protect these funds."

The statement said that finance companies registered under the Finance Companies Act have to conform to the following:

Obtain an annual licence from the Central Bank for the continuance of their business after satisfying the latter that all norms set by them have been complied with. This licence has to be displayed in a prominent place in the office for the information of the public.
Limit the amount of Public Deposits that they can solicit and obtain from the public to 10 times the Capital Funds of each company.
15% of all deposits obtained from the public have to be kept in liquid assets in the form of Treasury Bills, Fixed Deposits and cash at commercial banks, so that in any eventuality these could be realised for re-payment to the depositors.
The maximum interest rates that the finance companies can offer to the public are controlled by the Central Bank. A copy of the latest balance sheet and accounts should be prominently displayed for the information of the customers.
Every advertisement soliciting deposits from the public should give briefly specified statistics relating to the company for the last three years together with the names of the directors. The amount that can be given out as loans or financial accommodation to any person (including family members) is limited to 10% of the total given out as loans, etc.
No loans or financial accommodation can be given to a director or his immediate family members, including partnerships of which they are partners or to any holding, subsidiary or associate companies. The annual accounts in addition to being audited have to be submitted to the Accounting and Auditing Standards Monitoring Board who have been given the necessary powers to scrutinise same and require the Institution to make any changes which they consider necessary to give proper and fair information in the published accounts, notes and statements, so that there is transparency by the institution in the above publication.
Permission has to be obtained from the Central Bank for opening of branches and sub-offices who will have to satisfy themselves that these are in the best interests of the organisation and will be properly run and controlled by the Head Office of that organisation before granting permission. The statement said that on representations made by the association registered and licensed finance companies are to be given more powers to expedite the collection of overdue loans in order to protect the depositors' funds in such companies.

Grameen Bank founder visits Sri Lanka
By Quintus Perera
As an accepted normal practice, lending institutions do not grant loans to poor people, for the simple reason that they cannot pledge any security. Prof. Mohamed Yunus of Bangladesh going on the premise that people are poor because of circumstances beyond their control realized the need to helping them to do something of their own.

Thus, deviating from the profession of teaching elegant economic theories at the Chittagong University as far back as the early 1970s, he established the "poor power", helping the poor financially to be successful in life with their talents and skills.

He realized that there was a great distance between the real life of the poor and hungry people and the abstract world of economic theory. On a concept of economics of the poor, he started a programme called Grameen Banking, providing money to the poor in Bangladesh and finally creating a separate bank for the poor called Grameen Bank in 1983 which now caters to 2.5 million Bangladeshis.

The Grameen Banking concept has now spread to over 100 countries. Prof. Yunus was in Sri Lanka briefly last week to appreciate the progress of the Grameen Banking concept which has now been successfully adapted by the Ceylinco Grameen Credit Co. Ltd (CGCCL) in giving loans to a large number of poor people.

Lalith Kotalawala, Chairman, CGCCL, said he was impressed with the Grameen concept of empowering the poor economically and after a careful study Ceylinco started the project in 1997. He said that while they had various types of banks that grant loans, their regulations prohibited granting loans of Rs. 5,000 and providing loans without security.

After three years of setting up of Grameen banking in Sri Lanka, they now have nearly 100 branches and have already disbursed around Rs. 90 million among the poor. He said that the recovery rate has been 100 percent.

CIC Fertilizers rewards dealers on performance
CIC Fertlizers Pvt Ltd held its fourth successive dealer convention in Ratnapura to recognise and reward dealers who had performed exceptionally well during last year.
Earlier CIC Fertilizer, the market leader in fertilizer, held three similar dealer conventions to reward dealers in the North Central, Central and Southern Regions.

Samantha Ranatunge, Director of CIC acknowledged the untiring efforts and commitment of the dealers in the region and thanked them for the loyalty and support given during the past year. "As a company which came into the market only in 1993 CIC Fertilizers is proud to have a dominant position in the fertlizer market today. CIC Pohara has been the preferred fertlizer for the farmer whether it's for paddy, vegetables or for the plantations," he said.

Awards were given in three categories. namely tea factories (New Vithanakande - Kalawana), dealers (Samaranayake Traders - Kalawana) and government section (Tea Small Holding Authority - Ratnapura). In addition Kongahawatte Tea Factory - Pelmadulla, Leska Traders - Balangoda and Doralawitiya Hena Kahawatte were recognized by CIC Fertilizers for having a long and outstanding relationship with the company, a CIC statement said. CIC Fertilizers which has three Blending plants in Peliyagoda, Kurunegala and Maho markets its fertilizer through a network of dealers and sales oulets located islandwide.

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