The Central Bank has ordered an unofficial ‘bank’ run by a business cartel in Dambulla to shut down but it continues its operations, disregarding the warning.
The unofficial bank openly operates inside the Dambulla Economic Centre (DEC) handling millions of rupees on a daily basis and defrauding the state of tax revenues, the Sunday Times learns.
The rogue financial institute, created with the patronage of about 120 wealthy DEC traders, served other traders at the centre and had been in operation for the past one year, said sources close to the market, a hot spot of a mafia that allegedly manipulates prices of vegetables. The Sunday Times in its July 5 issue carried the story exposing the vegetable mafia.
The sources said the “bank” which had a five-member board of directors continued to defy the Central Bank’s warnings because of political support.Documents seen by The Sunday Times show that the bank serves as a lending institute and collects interest from its customers on a daily basis.
A trader said the bank was another Sakvithi waiting to happen unless the authorities acted without further delay and brought an end to its operations. “This institute is a law unto itself,” he said.
Central Bank Director S.S. Ratnayake, who is in charge of Non-Bank Financial Institutions, told The Sunday Times they had advised the operators to stay within the Finance Companies Act or bring an immediate halt to their business.
“This institute is definitely not consistent with banking laws. We have spoken to them and even warned them in writing about the consequences they would face should they continue with the operations,” Mr. Ratnayake said.
“Even at this late hour this institute is encouraged to come under the provisions of the law or else it will be asked to shut down and legal action would be instituted against it,” he warned.
Mr. Ratnayake said a Central Bank team visited this institute recently and seized several documents. “We are examining them ahead of taking legal action against the operators,” he said. |
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