Finance Companies Act (No. 78 of 1988)

Sri Lanka Consolidated Acts

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Finance Companies Act (No. 78 of 1988) - Sect 9

Directions of the Board

(1) Notwithstanding the provisions of any other law. the Board may give directions to finance companies or to any group or category of finance companies regarding the manner in which any aspect of the business of such companies are to be conducted and in particular

	(a) the terms and conditions under which deposits may be accepted by such companies, the maximum rates of interest payable on such deposits, and the maximum periods for which deposits may be accepted and the maximum amount that may be deposited with a company in the name of one person in one or more accounts;

	(b) the terms and conditions under which any loan, credit facility or any type of financial accommodation may be granted by such companies, the maximum rates of interest that may be charged on such loans, credit facilities or other types of financial accommodation, and the maximum periods for which any such loan, credit facility or other type of financial accommodation may be granted ;

	(c) the maximum rates which may be paid to, or charged by, such companies by way of commissions, discounts, fees or other receipts or payments whatsoever ;

	(d) the minimum initial payment a prospective hirer should make on any hire purchase agreement and specific different initial payments for different classes of transactions; such minimum initial payment may be expressed as a percentage of the value of the goods hired under such agreement;

	(e) the terms and conditions under which investments may be made by such companies;

	(f) the maximum permissible maturities for loans, credit facilities or other types of financial accommodation and investments made by such companies, and the nature and amount of the security that may be required or permitted for various types of lending, credit and investment operations;

	(g) the form and manner in which books of accounts or other records or documents are to be maintained by such companies;

	(h) the exclusion from the income of companies in whole or in part, unpaid interest in respect of loans granted, if such loans have become overdue;

	(i) the minimum ratio which the liquid assets of such companies should bear to the total deposit liabilities of such companies;

	(j) the maintenance of cash balances by finance companies with the Central Bank of Sri Lanka if so required by the Board, and the minimum ratio such cash balances should bear to the deposit liabilities of finance companies;

	(k) conditions which should be applicable to withdrawal by depositors of deposits before maturity;

	(l) prohibiting such companies from increasing the amount of their loans, credit facilities other types of financial accommodation or investments;

	(m) fixing the limits to the rate at which the amount of any loans, investments or financial accommodation made or granted by them may be increased within specified periods ;

	(n) requiring the decrease of the amount of their loans, investments or financial accommodation to specified limits within a specified period :

(o) the maximum percentage of the share capital in a finance company which may be held

(i) by a company, an incorporated body, or an individual;

(ii) in the aggregate by

	(p) the margin to be maintained in respect of secured advances ;

	(q) the terms and conditions relating to leasing agreements between the company and a lessee;

	(r) restriction on the types of activities that may he carried on by Finance Companies.

(2) The maximum rates of interest fixed by any direction under paragraphs (a) and (b) of subsection (1) shall, if so determined by the Board, apply in respect of any deposit accepted or in respect of any loan, credit facility or any other financial accommodation granted, before the date of such direction:

(3) For the purposes of this Act, the Board may give directions where necessary to any finance company in particular on such matters as are specified in subsection Provided, however, that a competent court may, on any application made to it in that behalf by a finance company at any while any direction is in force, make a declaration permitting that company to carry on its business without being subject to such direction, or may vary or alter such direction in such a manner as the court may determine, and any declaration by the court as aforesaid shall have effect notwithstanding anything to the contrary in the direction made by the Board

(4) The Monetary Board may in its discretion pay interest on any cash balance maintained by a" finance company in the Central Bank of Sri Lanka, in pursuance of a direction, issued to it under paragraph (j) ,at such rate as may be determined by the Board.

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