Oct 04, 2010 (LBO) – Sri Lankans investing in unregulated investment schemes face higher risks and should not expect government bailouts if their investments go sour, the banking regulator has warned. Central bank governor Nivard Cabraal said the regulator has repeatedly warned the public of the risk of investing money in unregulated institutions and publicised those that are regulated.
“Everyone knows the institutions that are regulated by the central bank,” he told a news conference. “Despite that they knowingly invest money in (unregulated) schemes, taking a risk, and then get into trouble.”
Cabraal said the central bank could only regulate institutions covered by the law and that it was not possible to regulate all deposit-taking institutions.
“Even newspaper publishers take deposits when they take subscriptions,” Cabraal said.
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“We can’t be expected to regulate all of them.”
He was responding to a question why they could not regulate firms like those offering forestry investments where investors have complained that some firms taking deposits have not even started growing the trees or the plantations are not in the promised locations.
Several firms in the island are offeri