Yield Chase

Oct 03, 2008 (LBO) – Sri Lanka’s central bank promised more action against unauthorized deposit institutions but said those who lost money in recent Ponzi-style financial scams were victims of chasing high yields. Central Bank governor Nivard Cabraal said the central bank itself has spent millions of rupees advertising against high yield scams and pyramid schemes, while registered deposit taking institutions spent even more money advertising their products.

Open Eyes

“Despite all these actions people put their money in unauthorized institutions,” Governor Nivard Cabraal said at a hastily called press conference.

“People cannot say they did not know.”

Cabraal said the central bank’s unit that supervises non-bank financial institutions had been quietly acting and had licensed or caused deposits to be paid back by several institutions, contrary to critics who said the regulator has been ‘sleeping’.

He said time has been given for unauthorized institutions to register and show that they were carrying on a sustainable business according to central bank guidelines. He said investigators had to work carefully to avoid being hauled into court.

Okanda Finance, one of six firms named by