Annual Report.CDR - Colombo Stock Exchange

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)
42. The Company has been unable to comply with the following directions issued by the Central Bank
of Sri Lanka under the provisions of the Finance Companies Act No. 78 of 1988.
Direction No. 1 of 2003
a) Every finance company shall maintain capital funds which shall not at anytime be less than
ten (10) percent of the total deposit liabilities. The company's capital funds to total deposit
liabilities as at 31st March 2010 was negative 11.32%
b)A sum equal to not less than 50% of the profit should be transferred to the Reserve Fund
where the capital funds are less than 10% of the deposit liabilities. As the company has
incurred a net loss of Rs.4,285,937,283/- no transfer has been made during the year
under review, which is more fully described in note 30 to the financial statements.
Direction No. 1 of 2009
a) Every finance company shall maintain a minimum holding of liquid assets equal to 10% of the
time deposits and certificates of deposits and 15% of the savings deposits whereas the
liquid assets of the company as at 31st March 2010, was Rs.398,665,207/- against the
requirement of Rs. 2,633,710,835/-
b)Every finance company shall maintain assets in the form of Sri Lanka Government Treasury
Bills, Sri Lanka Government Securities and Central Bank of Sri Lanka Securities equivalents
to seven and half (7.5) percent of the average its month end total deposits liabilities of the twelve
months of the preceding financial year, but the balance in above securities were Nil as at 31st March 2010.
Direction No. 2 of 2006
Every finance company is required to maintain a minimum core capital ratio of 5% and a
minimum total risk weighted capital ratio of 10% whereas the reference ratios of the company
were negative 18.01% and negative 18.25% respectively as at 31st March 2010.
T H E F I N A N C E C O . P L C - A N N U A L R E P O RT 2 0 0 9 - 2 0 1 0
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