Sri Lanka’s LOLC says People’s Bank facility fully cash-secured

LOLC Holdings has disputed claims shared online about a banking arrangement involving the group and state-owned People’s Bank. In a filing to the Colombo Stock Exchange on October 14, according to Newswire, the company said its local-currency borrowing is secured by a US-dollar deposit kept at People’s Bank.

LOLC said group entities maintain US-dollar deposits at banks in Sri Lanka and abroad for treasury purposes, and use their value as security when obtaining local-currency funds. Newswire reported that the arrangement allows the group to access rupees without converting the dollar assets, and that LOLC operates in 27 countries. The company described such funding practices as conventional.

The company rejected claims that the deposit was held overseas, that its existence or location was unclear, or that People’s Bank would need to locate and recover an unidentified asset. It also denied that the facility exposed the bank to unsecured lending or endangered public deposits. Newswire additionally reported that LOLC rejected allegations of questionable banking practices, foreign-exchange speculation and improper use of public funds. The reports included no comment from People’s Bank.

Newswire said LOLC had alerted relevant regulatory and other authorities to publications it considers materially misleading. The company reserved the option of legal action against those it considers responsible for creating or distributing such information, where legal conditions permit.