LOLC Holdings PLC has rejected social media claims that its local-currency borrowing from state-owned People’s Bank put public money at risk, saying the facility is secured against a US dollar deposit held with the bank itself. The company says the online allegations have created a false impression of wrongdoing, and analysts warn that such campaigns could damage investor confidence in Sri Lanka’s recovery.
What the company says about the facility
LOLC said the arrangement does not involve an unidentified overseas asset that People’s Bank would have to chase to recover its money. It also said the borrowing is not an unsecured exposure of public deposits. The company described the transaction as a conventional treasury arrangement and rejected suggestions that it showed questionable banking practice, foreign-exchange speculation or the improper use of public funds.
According to LOLC, the facility forms part of its international treasury operations. Group entities hold US dollar deposits with local and international banks, and Sri Lankan entities use the value of those deposits as security to obtain rupee funding. The group operates in 27 countries and says the approach helps it manage liquidity and foreign-exchange resources across several markets.
Risk to the economy
The dispute comes as Sri Lanka tries to attract foreign direct investment, encourage private-sector growth, create jobs and restore confidence after years of economic disruption. Investors weigh taxation, infrastructure and economic stability, but also whether commercial disputes are handled through credible evidence or sensational online narratives.
Foreign-currency deposits combined with domestic borrowing can be complex, and reducing such deals to simple accusations without examining their structure risks misleading the public. Allegations involving a state-owned bank can also quickly take on political weight. If they spread without verification, they can put pressure on government institutions to respond before the facts are established, and complicate efforts to build working partnerships between the public and private sectors.
Repeated allegations against legitimate commercial activity could also leave Sri Lanka with an image as an unpredictable place to do business, which would work against the Government’s efforts to present the country as transparent and rules-based.
Scrutiny remains legitimate
Defending companies against misinformation does not remove them from scrutiny. The lending safeguards applied by People’s Bank, the adequacy of the collateral and compliance with applicable regulations all remain proper subjects for independent examination. The difference lies between investigation based on evidence and allegations circulated without sufficient factual support.
LOLC said it is referring the relevant publications, and the spread of materially misleading information, to the appropriate regulatory and other authorities. It has also reserved its legal rights where the applicable legal thresholds are met.