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Central Bank warns of future scams
2008-10-02 18:06:26
The Central Bank (CB), in the aftermath of the Sakvithi finance company scam in which depositors lost millions of rupees and revelations of other questionable unregistered finance companies which sent panicked depositors demanding their money, on Thursday said the scandals were revealed due to the Bank's due diligence and told the public to take heed of its warnings of such spurious institutions.
At a press conference today, CB Governor Ajith Nivard Cabraal said the public's greed for high interest rates led to the situation in which many people have lost money.
The Governor said this issue cropped up because the CB was active. On September 19 of this year, due diligence was done on six institutions, one of which was Sakvithi. Those institutions were visited by the CB which collected information and compiled into a report by the Director of Non- Bank Supervision. A few days later, the Monetary Board declared them to be illegal and informed the institutions they had one month to rectify their shortcomings and register themselves with the CB, in accordance with the laws.
"If we had not gone, nothing would have happened," the Governor said. He added that the CB spends Rs.1 million every month on advertising to the public so it is questionable as to how some have said they have never seen the warnings. According to the Governor, banks and finance companies have placed advertisements in the media totalling to over Rs.4.4 billion over the past two years. The Governor warned that higher returns also bring about higher risks and that in the future, the CB will continue to name institutions after performing due diligence. He said the President and the Ministry of Finance are being continually updated on its findings. |
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