Risky Behaviour

Feb 23, 2009 (LBO) – Sri Lanka’s existing financial regulation are adequate to take action against unregistered finance firms who defraud customers, a former member of the central bank monetary board said. Deva Rodrigo said the recent collapse of unregistered finance companies had raised fears about the stability of the financial system.

This was one of the many ‘home-grown’ problems the country has to deal with in the face of a global economic crisis that was also affecting local businesses, he said.

“Saying institutions are not registered and therefore saying the central bank is not responsible as a regulator to supervise them is not a good attitude,” he told a seminar on Sri Lanka’s response to the global economic crisis organised by the Institute of Policy Studies, a think-tank.

“There is provision in the finance companies act for the regulator to intervene – to put a stop to whatever they are doing.”

Rodrigo, who is also a former chairman of the Ceylon Chamber of Comerce, was referring to the recent collapse of several unregistered finance companies which has left thousands of depositors unable to withdraw their money.

Some of the companies got around existing regulations to e