Jan 04, 2011 (LBO) – Sri Lankans who invest in high-risk, high-return unauthorised investment schemes will not be bailed out at tax payer expense if they lose money in future, central bank governor Nivard Cabraal said. The regulator will continue public awareness campaigns warning people of the danger of investing money in unauthorised schemes, he said.
“We want to ensure they will not get lured by prohibited schemes and lose their money and then they come running back and ask for redress,” Cabraal said in a speech on the bank’s monetary policy for 2011.
“We will not be able to give any redress. We want people to adhere to the instructions we have given, on where people can invest, which the registered ones are,” Cabraal said.
He was referring to several investment scams in recent years in which investors were lured by high interest rates offered by unregistered finance companies whose subsequent collapse left many unable to recover their money.
The duped investors subsequently demanded the central bank step in and bail them out with tax payer money.
The regulator did intervene and restructured several firms but many depositors are yet to recover all their funds.
The central bank said it