Those who deposit money with unregistered finance companies do so at their own risk – CB

By Rathindra Kuruwita

The Central Bank of Sri Lanka (CBSL) was not bound by the law to protect the interests of those who have deposited money in financial institutions that are not registered with it, Assistant Governor of the CBSL J. P. R. Karunaratne said.

The existing laws also did not empower the CBSL to intervene on behalf of such depositors, he said.

“However, under some provisions we investigate institutions that are taking deposits from people illegally. Then we take legal action against the culprits. But we cannot help the depositors,” he said.

Anyone who deposited money with an unauthorised financial institution did so at his or her own risk, Karunaratne said, adding that registered financial institutions were now offering low interest rates. That had opened doors for various scammers to manipulate people, he said. The CBSL was investigating about 125 complaints of such issues, he said.

Some retired persons were solely dependent on interest from their deposits. They tried to secure highest possible interests. They were also targeted by the scammers, Karunaratne said.

Meanwhile, Director of the Department of Supervision of Non-Bank Financial Institutions at CBSL, Chanuki Jayasinghe said the Central Bank on its website had published a list of banks and financial institutions that were registered with it. The list was also periodically published in newspapers, she said.

“Registered institutions give an interest of about 10-12 percent per annum now. These unauthorised financial institutions usually give interest of five to 10 percent a month. People should also use their intelligence. They must ask themselves; how can one give me five or 10 percent interest per month. What kind of investments can yield such massive payouts? These unauthorised companies for the most part have one branch,” she said.

CBSL instructed its regional officials, government servants and the police to inform the Bank of unauthorised financial institutions, Ajani Liyanapatabendi, Additional Director of CBSL’s Department of Supervision of Non-Bank Financial Institutions.

Some people, who were financially literate, also deposited money with those institutions, for short periods, to evade taxes, she said.