100 % guarantee on finance company deposits fuels confusion
View(s):A 2016 budget directive providing a 100 per cent guarantee on deposits of all registered finance companies has fuelled confusion among depositors and finance companies following Finance Minister Ravi Karunanayake’s claim – at a budget seminar televised over Channel EYE of Rupavahini on Tuesday – that this is only for senior citizens.
The Finance Ministry so far has not issued a circular clarifying the proposal on a 100 per cent Central Bank (CB) guarantee, Deputy Central Bank Governor Dr. Nandalal Weerasinghe said in response to a question raised by the Business Times.
He noted that the budget is at the committee stage in parliament and relevant circulars and clarifications would be made after the passing of the budget in parliament. Although the purpose of supervision and regulation of the CB was to protect the depositors of banks and registered finance companies, the bank has not been providing such a guarantee to depositors, he added.
However the Finance Minister’s recent clarification on the proposal came as a shock to a large number of depositors who have deposited in finance companies in the aftermath of the budget proposal. Several finance companies have already started campaigns to canvass deposits deploying more canvassers’ countrywide motivating depositors to withdraw their money in savings and fixed deposits in banks and transfer their deposits into non banking financial institutions.
The Finance Minister’s statement that” in order to provide the depositors with a sense of comfort and security, the Central Bank of Sri Lanka will give a 100% guarantee on all deposits of all the registered finance companies by end January 2016” prompted some finance companies to launch savings and fixed deposit promotion campaigns countrywide.
“After making such a statement, how can he say that the 100 per cent guarantee is only for senior citizens,” several depositors who have already being misled due to this budget proposal told the Business Times.