The Finance Company gets Rs. 6 b lifeline from Central Bank

The Finance Company Plc this week received a Rs. 6 billion credit line from the Central Bank as part of a restructuring and revival exercise.
The Finance Company Plc, being the first finance company of Sri Lanka, has cultivated a reputation of being a pioneer in not only the finance industry but in many other aspects. Established in 1940, the company will be celebrating its diamond jubilee in 2015 and has a proud legacy of catering to the needs of the people and building brand equity.
A household brand with 58 branches spread across the Island, with time the company has evolved and diversified to include various companies and products in sectors other than finance, such as real estate, education, investment and SME to name just a few.
The Finance Company Plc Chairman Dr. S.H. A.M. Abeyratne speaking about the current status of the company said: “In June 2014 the Central Bank of Sri Lanka (CBSL) decided to restructure the company by appointing a new board of directors, which consisted of experienced professionals.
“As such when we were appointed, a mandate was given to us which included strengthening the financial status of the company, the branch network and turning around the company from the status that existed prior to June so that The Finance will become a profit-making company yet again. It was under this premise that the CBSL approved a Rs. 6 billion credit line to help the company along with its plan of strengthening The Finance.”
Before the approval, the company was requested by the CBSL to present an implementable business plan. Under the purview of Aruna Lekamge, Managing Director of the company, a short-term business plan was created and implemented through which the company was able to achieve all the goals that were initially set out for it in the plan.
The short-term plan included testing employees as well as the customer base, economy, brand equity the strength of new management initiatives that were applied after June 2014. This showcased the capacity of the company to CBSL, which persuaded them to arrive at the decision of providing the required financial support for the company.
“When approving the credit line, the CBSL did not just give us the money, but they studied our work programs, inquired about what is happening in our workplace and tested our short-term business plan and they were convinced due our recent successes. They realised that The Finance Company could go a further step with the investment of this money,” Dr. Abeyratne affirmed.
Currently the Company boasts of a good deposit intake, a good recovery ratio and a net interest income. Furthermore, the company draws its strengths from the diverse assets it holds in terms of land, buildings, educational institutes and many more.
Turning things around
Elaborating further, Lekamge said: “The Finance was affected by the collapse of the Ceylinco Group of Companies and as we took over, it was a massive challenge to try and see if we can turn this company around. That is also why CBSL came up with this solution to grant a credit line of Rs. 6 billion to restructure the company. Furthermore, when we first took over, out of the 58 branches only 18 branches had made profits and during the last six months we have been able to increase that number to 40.
“We have also doubled our stocks in the finance product portfolio and since the initiation of the short-term business plan, quarter-to-quarter business growth has been 100%. If you consider the total growth for the last six months there has been a growth of 22% in the whole portfolio. This shows that The Finance can regain its number one position.”
To strengthen the company and its functions, the credit line was offered to The Finance at a very low rate by the CBSL where the company looks to support the nation, people and make the livelihood and living standards of the people better. As such the current concept of the company includes “working for the people.”
A five-year plan was presented to the CBSL in which the company detailed how it would invest the money provided and this plan was created to be in line with the country’s development goals where the company looks to strengthen and provide the necessary support to develop the livelihood, industries and wealth of the people.
Special focus will be given to migrant workers who contribute immensely to the foreign revenue of the country through their remittances.
“That’s why we are focusing on the Rataviruwo program,” said Lekamge. “We are joining hands with the Foreign Employment Bureau to enhance the job status of Sri Lankans who seek overseas employment. We aim to strengthen their skills so that they can go as skilled professionals.
“Furthermore, we have a special migrant workers livelihood program, where family members living here are given the required support to develop a livelihood program within their vicinity. We can support them to start a small or medium industry and as such their hard-earned money will be properly used to develop their income in Sri Lanka.”
Plans are underway to provide additional services such as business intelligence where trained micro finance agents will be positioned in villages to provide support on how to structure business, deliver products that the country needs and conduct analysis on how to support the manufacturing lines of the country. All programs will be conducted by the staff of The Finance and will be closely monitored by the CBSL.
“We have a broad idea to develop not only the company but the people in Sri Lanka and the whole economy. This money by CBSL will be used only for investment at a good rate for good and right business,” stated Lekamge.