Three finance companies seek registration

Lumbini EDIRISINGHE

Three unregistered finance companies have responded positively and have shown interest in registering with the Central Bank.

The three financial institutions are Piyadasa Rathnayake, Hungama, D.K Ubayasiri and Sriyawi Homes (Narangoda Companies.)

Director Supervision of Nonbank Financial Institutions, Sepala Rathnayake said that the Central Bank had named six financial institutions as financially unstable on September 26. “The Central Bank has given them a one month deadline to register with us or face consequences,” he said.

Speaking to ‘Daily News Business’ he said people invest money in these unauthorised finance companies since they get high returns. “In addition since these are not registered with the Central Bank investors also evade income tax and they think these are the best way to hide their income,” he said.

However three financial institutions, Okanda Finance, Sakvithi and Nadini Finance are yet to respond to the Central Bank deadline.

According to the Central Bank these people or the companies are not authorised to carry on finance business by accepting money from the public as deposits or in any other form and the lending of money on interest and/or the investment of money in any manner.

Central Bank regulation states that these three financial institutions that responded positively would have to form a public company with at least six shareholders and also show a capital base of over Rs. 200 million.

This has to be certified by auditors.

Rathnayake also said new amendments to the financial act are being formulated in parliament which would give more teeth to the Central bank to curb ‘bogus’ financial institutions. In a bid to stop fraudulent financial institutions operating, the Government is to enact new laws to bring to book culprits maintaining such institutions,

The first major financial scandal to hit Sri Lanka was the sudden closure of Pramuka Savings Bank and the Government had to intervene to bail out the customers. Subsequently a pyramid scheme rocked the country, which too was brought under control.

The latest was the famed tuition master turned investor Sakvithi Ranasinghe, who provided very high interest rates to investors through his unregistered finance company, had fled the country leaving thousands of depositors stranded.

The tuition master ran a massive advertising campaign to woo depositors and had managed to get over Rs. 900 million in deposits.

Mirihana police are conducting an investigation with the aim of arresting him and he is believed to be now in Thailand with his family. Police so far have received over 1,500 complaints regarding Ranasinghe’s money scam.

There are 37 licensed commercial banks and licensed specialised banks supervised by the Central Bank that are operating in the country.