Govt. tells public to be cautious of deposits in non-bank sector

Friday, 5 June 2020 02:29 - - {{hitsCtrl.values.hits}}

Says not to be enticed by high interest rates
Be aware that CBSL insurance covers only up to Rs. 600,000 in case of collapse of institutions

The Government yesterday appealed to the public to be cautious when investing in non-Bank financial institutions and not be enticed by higher interest rates to deposit their hard-earned savings in unsound companies.

Cabinet Spokesman Bandula Gunawardana said that Cabinet had discussed at length the fallout caused by the collapse of finance companies, such as the recent case with The Finance Company, and how a large number of people were left in the lurch.

“Prime Minister Mahinda Rajapaksa held a meeting with the Governor of the Central Bank Professor W. D. Lakshman and other Central Bank officials on how to manage the Non-Bank Finance and Leasing sectors, and expressed his displeasure at the manner in which finance companies licensed by the Central Bank were not properly monitored.”

Gunawardana warned that under current regulations, the Central Bank will pay up to Rs. 600,000 to all insured depositors of The Finance Company, which covers 93% of all the depositors of TFC. Those who have deposited more than this amount will be paid the balance amount after liquidation of properties belonging to TFC.

The Minister said that most depositors are unaware that the maximum that the Central Bank will cover under the insurance scheme is Rs. 600,000, and it is important that depositors are made aware of this, so they know the risks in investing in the non-bank sector.

With regards to ETI investors, the Cabinet Spokesman said the Central Bank has informed that it cannot make any payment, as there are ongoing court cases and no measures can be taken until these are resolved.