Verified

People’s Bank loan fully cash-secured: LOLC

LOLC Holdings PLC has issued a public clarification categorically rejecting what it describes as misleading and factually inaccurate information circulating across online and social-media channels regarding a banking facility involving the LOLC Group and People’s Bank.

According to the company, the local-currency borrowing is fully cash-secured against a US-dollar deposit maintained directly with People’s Bank itself. As part of its global treasury management, LOLC Group entities hold US-dollar deposits with several local and international financial institutions, including People’s Bank. Sri Lankan entities within the Group utilise the collateral value of these foreign-currency deposits to raise local-currency funding, providing People's Bank with full collateral backing for the credit facility.

Addressing assertions circulating online, LOLC stated there is no factual basis for claims suggesting that the existence or location of the deposit is uncertain, that People’s Bank would need to recover an unidentified overseas asset, or that the transaction represents an unsecured exposure of public funds.

The arrangement is described as a conventional treasury transaction used by multinational corporations operating across multiple jurisdictions and currencies. Rather than converting existing US-dollar assets into Sri Lankan rupees, the Group preserves its foreign-currency holdings while utilising their value to raise local-currency funds across its international operations spanning 27 countries.

The company dismissed characterisations depicting the transaction as evidence of questionable banking practices, foreign-exchange speculation, or improper use of public funds, stating such narratives are without factual foundation and create a materially distorted impression.

Due to the seriousness of the matter, LOLC announced it is bringing relevant publications and misleading statements to the attention of appropriate regulatory and other authorities. Furthermore, the Group confirmed its intention to exercise all available legal rights and remedies against individuals or organisations responsible for originating, publishing, or continuing to disseminate false or misleading content concerning the Group.

LOLC affirmed that it will continue operating transparently and responsibly while taking necessary actions to protect the interests of the Group and its stakeholders.