Friday, 26 June 2020 17:38

Sri Lanka’s unregulated money lending to be regulated soon

Sri Lanka’s unregulated money lending activities and non licensed finance and leasing institutions are to be regulated while strengthening the stability of non bank financial institutions.



Central Bank reiterates the requirement for enactment of a legal framework to regulate unregulated money lending activities so that a better and more effective regulatory environment is crated for money lending institutions in the future.

Hence the need for the enactment of the proposed Micro finance and Credit Regulatory Authority Act, approved by the Monetary Board of the CBSL is vital, CB announced.

The CB carries out the regulation and supervision of licensed finance companies (LFCs) to ensure and strengthen the stability of the LFCs and in turn the stability of the financial system, which is one of its core objectives.

However the Department of Supervision of Non-Bank Financial Institutions of t CBSL does not guarantee the return of deposits of a regulated financial institution, and repayment of such deposits from CBSL funds.

In 2010, CBSL established the Sri Lanka Deposit Insurance and Liquidity Support Scheme (the scheme), which currently pays a maximum of Rs. 600,000 per depositor for each financial institution of which licence is cancelled or suspended.

The depositors of Central Investment and Finance PLC, The Standard Credit Finance Ltd, The Finance PLC and TKS Finance Limited (said LFCs), of which licenses were cancelled recently are being repaid out of the scheme, subject to the said maximum of Rs. 600,000, per depositor.

(LIN)

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