‘Laws inadequate to deal with errant financial institutions’
N. R. Gajendran
The Central Bank was aware that a bogus financial institution was in
operation for over two years but could not do anything about it since
the laws were inadequate to take the offenders to task, said Partner
Gajma and Co. Chartered Accountants, N. R. Gajendran. He said education
and a proper monitoring and regulatory mechanism was essential to
curtail financial frauds in the country.
“People need to be educated on proper investments to avoid
institutions which are not recognised offering large returns.The names
of illegal financial institutions should be published”, he said.
Sakvithi Ranasinghe wouldn’t have been able to swindle Rs. 500 million
had the laws been in place to deal with such fraudulent operators.
Ranasinghe, a popular English tuition master in the Mirihana police
division is believed to have left the country with the money of the
Finance and State Revenue Minister Ranjith Siyambalapitiya said new
laws will be enacted soon to nab offenders of financial institutions and
take action against institutions functioning without legal status.
He said the Central Bank publishes the names of all authorised
financial institutions and also those operating illegally.
The present laws are not adequate to take action against offenders of
financial institutions and there is an urgent need to introduce
legislation to nab fraudulent operators.
Director, Department of Supervion of the Non Bank Financial
Institution, Central Bank, Sepala Ratnayake said investigations on the
fraudulent business proved that funds had been mobilised for various
Ratnayake denied that the Central Bank was aware about the operation
of the institution and said that they became aware of it only after a
recent newspaper advertisement.
According to the Bank Act and Finance Company Act financial
institutions cannot function without obtaining a licence from the
Monetary Board of the Central Bank. The Central Bank educates people on
authorised financial institutions due to the high risk nature of the
financial business. Meanwhile, the Central Bank published the names of
six unauthorised financial institutions on Thursday.