Central Bank tightened the regulatory grip with the introduction of minimum levels of capital.
Finance companies under a Central Bank directive will have to maintain capital adequate to cover 10 percent of their risk weighted assets.
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rnThe ruling, which takes effect from this month, will have to be complied by all finance companies. The standards are based on BASLE guidelines, which already apply to all commercial banks.
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rnldblquote Tier I should be 5 percent and Tier II also 5 percent with overall ratio at 10 percent, dblquote says Ms L K Gunatilake, Central Bank.rn
rnldblquote Tier I includes issued and paid up capital and earned revenues; Tier II includes supplementary capital, revaluation reserves, subordinated debts and preference shares. It based on BASLE guidelines and is same as that of commercial banks,
dblquote she says.
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rnRegulators say that most of the registered 26 finance companies can meet the new minimum capital requirements. In addition the Monetary Board has given the