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4.18 Liquidity of the Business

N 35/2018 STA
  1. 4.18.1Current assets of a Licensed Person must be at least 1.2 times of the current liabilities at all times;
  2. 4.18.2Current assets in this context consists of the following items from the Balance Sheet:
    1. a)Cash in hand (i.e. local and foreign currency stocks);
    2. b)Balances with banks (i.e. local and foreign bank balances);
    3. c)Receivables from the other financial institutions (local and foreign);
    4. d)Cheques which are within the validity period of six (6) months from the date of issue (i.e. valid cheques) received from the customers; and
    5. e)Unencumbered fixed deposits with banks or financial institutions with a remaining maturity period of less than three (3) months.
  3. 4.18.3Item (c) of Paragraph 4.18.2 of this Chapter must be recoverable and are not dormant or inactive during the past thirty (30) calendar days;
  4. 4.18.4For the computation of the current assets, the following items must not be considered:
    1. a)Post-dated cheques;
    2. b)Pre-payments;
    3. c)Mandatory deposits such as deposits for utility services, labor guarantee, etc.;
    4. d)Deposits under lien of any kind;
    5. e)Deposits which cannot be liquidated upon demand; and
    6. f)Debit balances in the current account of the owners, directors, controllers, managers, employees, customers, etc., if any (Refer to Paragraph 4.12 of this Chapter).
  5. 4.18.5Current liabilities in this context consists of the following items from the Balance Sheet:
    1. a)Liabilities towards customers for any outward remittances (local and foreign including the amount of unclaimed funds);
    2. b)Sundry Creditors;
    3. c)Accruals;
    4. d)Liabilities towards the beneficiaries of the inward remittances if the funds are received by the Licensed Person;
    5. e)Liabilities related to WPS;
    6. f)Amounts payable to banks and other financial institutions upon demand or payable within three (3) months - local and foreign;
    7. g)Any valid cheques issued by the Licensed Person which is not netted off against the bank balance; and
    8. h)Credit balances in the current account of the owners, directors, controllers, managers, employees, customers, etc., if any (Refer to Paragraph 4.12 of this Chapter).
  6. 4.18.6For the computation of current liabilities, the following items must not be considered:
    1. a)Post-dated cheques;
    2. b)Any kind of provisions including the provision for gratuity, leave salary, air tickets for the employees, annual maintenance contracts, etc.; and
    3. c)Amounts payable after three (3) months to banks and other financial institutions - local and foreign.