Mar 26, 2009 (LBO) – Sri Lanka’s The Finance Company, a member of the island’s troubled Ceylinco group, is suspending withdrawals of deposits for three months, while the firm is restructured under new management, officials said. State-run Lankaputhra Development Bank which has been appointed as the firm’s ‘managing agent’ by the Central Bank said interest will continue to accrue on deposits that are kept beyond maturity during the moratorium.
“Public needs a degree of patience and understanding¦priority is to service interest,” Sarath de Silva, chairman of Lankaputhra Development Bank said.
“Then we will have a structured repayment programme.”
The Finance, where deposits topped 26 billion rupees before the crisis hit, accounts for about a quarter of sector assets, has a portfolio of property, leases and hire purchase.
The 69 year old firm started funding real estate projects a decade ago and now holds land and housing projects it values at over 5 billion rupees, officials said.
The firm had a maturing mis-match in its books.
“Three month, six month and one year short term deposits have been advanced for up to 5 and 10 year loans,” says Lankaputra Development Bank’s chief risk officer Ravi Das