CB urges to deal with registered institutions

As per the media statement made by the Founder Chairman of the Golden Key Credit Card Company Ltd. on 22nd December, 2008, a crisis had arisen at the Golden Key Credit Card Company Ltd. where it has “been involved in a major credit card scam”.

In this regard, although the Golden Key Credit Company Ltd. is not a company regulated or supervised by the Central Bank, certain depositors of some of the regulated financial institutions within the Ceylinco Group of Companies have shown signs of stress, as per the reports received by us.

This is further confirmed by the media statement of the Founder Chairman of Ceylinco Consolidated on 27th December, 2008, where it has been stated that the problem at Golden Key Credit Card Company Ltd. “affects the reputation of the Ceylinco Group .....”.

This emerging situation naturally causes concerns within the financial system, since there are two licensed banks and several registered financial institutions popularly associated with the Ceylinco Group of Companies. It is in that context that the Central Bank is issuing this media statement.

In Sri Lanka, financial institutions that are registered with the Central Bank, namely; licensed banks, registered finance companies and leasing companies, and primary dealers are required to meet with certain stringent regulations on capital, liquidity, asset quality, risk concentration, governance practices, etc.

These regulations are designed to protect the depositors and creditors of licensed banks and registered financial institutions in their dealings with such institutions. Accordingly, the Central Bank informs the public that they should continue with their normal financial transactions with licensed and registered financial institutions.

At the same time, the Monetary Law Act No. 58 of 1949 provides extensive powers to the Monetary Board of Sri Lanka to intervene in various ways where the stability of the financial system is at any risk at any time.

Therefore, the public could rest assured that the Monetary Board would act in accordance with such powers in the event there is any imminent risk to any licensed or registered financial institution.