Declining levels in new deposits and premature withdrawals are hitting finance companies hard in the wake of the Golden Key Credit Card Company scandal and the current financial crisis.
The chairpersons and chief executive officers of all the finance and leasing companies met with the President on Thursday to inform the Government of the challenges they are facing. Also present at the meeting was the Export Development and International Trade Minister G.L. Peiris, Public Administration Minister Sarath Amunugama, Deputy Finance Minister Ranjith Siyambalapitiya and the Trade, Marketing Development, Cooperatives and Consumer Affairs Minister Bandula Gunawardena.
According to the Finance Houses Association of Sri Lanka Chairman Shirley Perera who described the meeting as 'fruitful', the Government might come up with a stimulus package to help this sector and will be submitting a proposal by the end of next week.
Mr. Perera said due to the adverse publicity given to the collapse of Golden Key and Sakvithi, two unregulated finance institutes, other registered finance companies are not getting many new deposits. He also said there have been increased levels of premature withdrawals which companies are not bound to honour. "With mature withdrawals, we have a plan and we can honour them," he said.
"We are not bound to honour requests for premature withdrawals. Money is invested in fixed deposits on agreed terms for a stipulated period of time. When withdrawals are requested prematurely, there is a problem," he said.
Mr. Perera said the President was also informed that banks are not cooperating and giving much facility to finance and leasing companies. This affects leasing companies in particular as they are entirely dependent on bank funding.
Certain companies also have investments in real estate and the exposures are high, Mr. Perera said.