Jan 02, 2009 (LBO) – Sri Lanka has no need for a liquidity facility for finance companies yet, central bank governor Nivard Cabraal said, as the sector faced a higher level of deposits withdrawals following uncertainty in financial markets.
“At the moment there is no need to do that,” Governor Cabraal told reporters this week.
“The system is working properly. We not see any danger which needs that kind of intervention.”
He was speaking to reporters at a media conference called to explain intervention at Sri Lanka’s Seylan Bank, which was put under the administration of state-run Bank of Ceylon and a new board of directors appointed.
Seylan Bank was taken over after its controlling Ceylinco business group saw the collapse of Golden Key Credit Card, a member firm. Ceylinco chief Lalith Kotelawala said he was exiting Seylan to pay off Golden Key members.
Some customers had withdrawn funds from Seylan in the uncertainty generated in the run-up to the central bank action, and the lack of clear understanding of the intervention.
Sri Lanka’s finance company sector has also seen higher levels of withdrawals. But Governor Cabraal urged customers to transact normal business with regulated financial institutions. Finan