Registration with Central Bank:

Rogue finance companies get 30-day deadline

Chaminda Perera and Jayasiri Munasinghe

COLOMBO: The Central Bank yesterday gave a deadline of one month for blacklisted finance companies to register, failing which they would face legal action.

The Bank declared Okanda Finance (Company) Limited, Nadini Finance Company Limited, Sakvithi House Construction (Private) Limited, Sriyavi Homes and Investments, and D.K. Udayasiri and Piyadasa Ratnayake alias Daduwam Mudalali as unauthorised finance companies / individuals.

“Action in case of their failure to comply with the Central Bank’s directive will depend on how they respond to our directive. They will either be asked to repay deposits and liquidate the companies or face the law enforcement authorities,” Central Bank Governor Ajith Nivard Cabraal said.

These financial institutions and individuals will be legally dealt with if they fail to register with the Central Bank within a month. They should meet the criteria laid down by the Central Bank to be a registered financial institution, the Governor said.

A financial institution or individual has to maintain a minimum deposit of Rs. 200 million with the Central Bank to qualify as a registered financial company. In addition, the Central Bank should be kept informed on the financial state of an organisation every month and officials have to be allowed to monitor their activities time to time.

Cabraal said yesterday the Central Bank is not in any way bound to reimburse the deposits of those who have made investments in illegal financial institutions.

He told the Daily News that people should think twice before making investments in illegal financial institutions which are flouting the provisions of Finance Companies Act enacted in 1988.

“The Monetary Board of the Central Bank declared four companies and two individuals engaged in financial business illegally and the Central Bank can not take any responsibility for the fate of depositors who have invested in those institutions,” Cabraal said.

Meanwhile Deputy Director of Department of Supervision on Non Banking Institutions, D. Ranaweera said yesterday said these companies and individuals should show their compliance to the Central Bank’s Monetary Board directive by making preliminary arrangements to register with the country’s finance regulator within 15 days.

The Central Bank on Thursday declared these institutions and individuals as unauthorised and directed to either surrender to law enforcement authorities or register with the Central Bank within 30 days in compliance with the Finance Companies Act.

Ranaweera said they will closely monitor how they adhere to their directive after 15 days. The Central Bank has identified four individuals reportedly engaged in illegal financial business and investigation into them continues.

“Our investigation into the dealings of Sakvithi Ranasinghe who illegally accepted deposits from the public in the guise of investment company is on. We have received a number of complaints against this racketeer who posed himself as a teacher and managed a business under the name of Sakvithi Investment Company.”

The Act does not have any provision in respect of the safety of officers involved in investigation of this nature. These officers should have special protection which is not ensured under this Act other than the ordinary law, Ranaweera said.

Meanwhile, Mirihana Police Fraud Detection Bureau investigating complaints against Sakvithi Ranasinghe who accepted over Rs 1,000 million worth deposits from the public yesterday said they received a complaint from a pensioner who had deposited over Rs 8 million.