Several Registered Finance companies (RFC) are making desperate efforts to meet the Central Bank deadline of June 30 to list in the stock market as they are likely to face tough action if they fail to do so, a top official of one RFC, who wished to be anonymous, said.
Non compliance will mean action in terms of the Bank’s directive issued under Monetary Law Act No 58 of 1949 and the Finance Companies Act No.78 of 1988 as amended by Act No. 83 of 1991.
Some companies were in the process of issuing Initial Public Offerings (IPO) while others were making their balance sheets in order and fulfilling capital requirements before listing, he added. Several of the smaller finance companies are closely-held family firms and they are a bit reluctant to go public, he said.
RFCs have been given two years to seeking the mandatory listing, a senior official of the Central Bank said adding however that they are willing to be flexible when considering the reasons for the delay of some finance companies in complying with the regulation.
So far 15 out of 36 RFCs have listed on the Colombo Stock Exchange and others are on the way, the Bank said this week. Four companies have been given the nod to list by the stock exchange and applications of other firms are being reviewed.
RFCs yet to be listed include several former Ceylinco group finance firms which are taking corrective action following the directions and rules issued under the provision of the Finance Companies Act.
Shirley Perera, a former chief of Sri Lanka's Finance Houses Association and Deputy Chairman Central Investments and Finance Ltd, said these regulations cover minimum capital adequacy and liquidity requirements, deposits, provisioning for bad and doubtful debts, single borrower limits and limits on equity investments as well as weaknesses and deficiencies in the financial condition, controls.
He expressed the belief that almost all RFCs with a few exceptions will be able to get listed in time.