Fitch says in the last few years finance companies have boosted their equity to asset ratios. In 1999-2001 Sri Lanka went through a severe economic crisis.
However the smaller companies in particular could be vulnerable. Fitch covers 80 percent of the sector by assets.
"From the asset quality point of view we see the ratio hovering around 11.5 to 12 percent which is double that of the banking system," Fitch Ratings analyst, J Anandakumar told ETV's Money Report business show.
"But then again given the risk profile that the finance companies take it is something that could be acceptable and it has declined compared to five or six percent earlier and now showing signs of increasing."
However companies could face stresses wit