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Monday June 3rd, 2024

India’s Mahindra Finance acquires Sri Lanka’s Ideal Finance for Rs.2bn

ECONOMYNEXT – India’s Mahindra Finance has invested 2 billion rupees in equity in Sri Lanka’s capital short Ideal Finance Limited to acquire a 58.2 percent stake, officials said.

"We are going to create a NBFI (non-banking financial institution) which is going to be a benchmark, an ‘Ideal’ company, which reaches millions of Sri Lankans, in both urban and non-urban sectors," Mahindra Finance Senior Vice President Marketing and Strategy R. Balaji said.
 
"We will focus on vehicle leasing and financing small and medium scale enterprises," he said.
 
Speaking to reporters in Colombo, he said that Mahindra Finance will invest the equity in three tranches up to 2021, with an initial investment of 700 million rupees.
 
"The first tranche will account for not only the regulatory investment for this year but also for next year," Balaji said.
 
The central bank had restricted Ideal Finance to total deposits of 700 million rupees as the firm had failed to meet a 1.5 billion rupee capital requirement on January 2019.
 
The firm has a capital base of around 1.25 billion.
 
In January 2020 NBFIs have to reach 2 billion rupees in capital and have a minimum 2.5 billion rupees by January 2021.
 
The central bank has been tightening regulations in the finance sector to force mergers among the 43 firms in business.
 
Ideal Finance Chairman Nalin Welgama said that the firm was not able to meet the regulatory capital requirements as it was in talks with Mahindra before January 2019.
 
"We were in talks for a long period of time. Mahindra’s mergers and acquisitions department wanted to dot all the i’s and cross all the t’s ," he said.
 
"The central bank was aware of it and patient with us, which is why they did not take any drastic action."
 
He said that with NBFIs facing pressures and economic growth slowing down, the entry of Mahindra Finance gives a strong signal.
 
Around 70 percent of the firm’s assets are in vehicle leasing, while around 6 percent are in real estate, which ratings agency Fitch said it was concerned about.
 
"We will wind down our assets in real estate. We have no real estate lending in India," Balaji said.
 
Mahindra Finance has 10 billion US dollars in assets under management with operations in India and US focusing mainly on vehicle leasing.
 
Ideal Finance was started in 2012 to support the Ideal Motors Group which sells cars.
 
On Saturday, Ideal and Mahindra began assembling vehicles in Sri Lanka under a joint venture.
 
The Ideal Group has a 10-year relationship with Mahindra, being the agent for the Indian vehicle manufacturer in Sri Lanka.
 

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Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Sri Lanka Navy assisting in rescue operations (Pic courtesy SL Navy)

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

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UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

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300 of 100,000 trees in Colombo considered high risk: state minister

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)

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