Sept 24, 2011 (LBO) – Sri Lanka’s central banks said it had tightened a law on finance businesses closing several loopholes and allowing authorities to probe unlicensed businesses more easily. A new bill on Finance Business passed by parliament on September 21, will replace an existing Finance Companies Act brought in 1998, the central bank said.
“The need to amend the Finance Companies Act which was enacted over 20 years ago has been felt by the a sector as well as the regulator to suit the current situation,” the Central Bank said in a statement.
“It has been necessary to enhance the examination and supervisory powers in respect of the licensed finance companies and to enhance the legal provisions to effectively curb unauthorised deposit taking persons and institutions.”
The new bill has closed a loophole in the definition of a ‘deposit’ the Central Bank said.
New rules will require the of word’s ‘finance, financial and financing’ by licensed non-bank deposit takers while unregistered institutions will be barred from the use of the words in their name.
The use of a the name, similar names or acronyms of licenses finance companies by other entities will also be prohi