Rogue finance companies operating in the country are now being brought under intensified surveillance of the Central Bank and it’s taking necessary legal action as these firms have become a severe threat to the current financial system affected by the second wave of COVID-19. The Central Bank will be taking measures to broaden public awareness on the consequences of engaging in unauthorised financial activities by errant finance companies.
It has intensified surveillance in detecting unauthorised finance businesses and deposit taking while seeking public support to take appropriate action against such errant financial institutions.
All operations of Eyon Lanka Investment and Film Production International Company (Pvt) Limited have been stopped by the monetary regulator as this unauthorised finance company has carried out an illicit finance business.
The Central Bank has already issued freezing orders prohibiting the company soliciting and mobilising deposits or any funds in any other forms, disposing / alienating assets, entering into any transaction in relation to any account, property or investment.
The Colombo High Court has extended the freezing orders until 15.01.2021. Further, a report was sent to the Attorney General’s Department on 02.11.2020 requesting to institute criminal proceedings against the rogue finance company.
The Central Bank reiterates the requirement for enactment of a legal framework to regulate unregulated money lending activities so that a better and more effective regulatory environment is created for money lending institutions in the future.
Registration under the Finance Leasing Act, No 56 of 2000 (as amended) (the FLA) is mandatory to carry out finance leasing business and any person carrying out finance leasing business without such registration commits an offence under the FLA.
The said institution has not been registered by CBSL to carry out finance leasing business and therefore, any finance leasing business carried out by such institution constitutes an offence.
Over 9000 depositors including retired members of security forces have become destitute due to the sudden collapse of the company and the freezing of its operations by the monetary authority, several disgruntled depositors said.
A meeting between the representatives of depositors, management of the company and CBSL officials was held on Tuesday (8) and the implementation of a payment plan was taken up for discussion. But the Monetary Board at its meeting held recently has already decided that the submitted repayment plan was not acceptable, a CBSL public notice revealed.