Business Times

CB to crack down on bogus finance companies

Sri Lanka's Central Bank has warned non registered finance companies against using words relating to finance in their company names. The Central Bank has issued a notice directed at companies using the word 'finance,' financing' or 'financial' as part of their company name or description, a senior official of the Department of Supervision of Non-Bank Financial Institutions of the Central Bank told Business Times.

Under the Finance Business Act, "no entity other than a licensed finance company shall use the words 'finance', 'financing' or 'financial' as part of its name or description," he said. He noted that there are large numbers of non registered financial institutions operating in the country using the word finance for their company name to mislead the public. The Central Bank has been given wide powers to take appropriate legal action against such companies under existing laws, he revealed.

The Act was passed in Parliament in September last year and became effective on February 2012, he said. He noted that it is compulsory to use the word finance in registered financial institutions and no other company can use the words 'Finance', 'Financing' and 'Financial' in the name description without the prior approval of the Monetary Board and all companies who want to engage in the business of finance should comply with the rules by May 9 this year, he disclosed.

The Central Bank has the power to publish the names and addresses of firms which use the words against the provisions of the Act and it will introduce a logo or a sign to be used by every registered finance company, he added. The requirement is not applicable to firms which are required by the Monetary Board to have as part of their name the word 'finance', 'financing' or 'financial' or their equivalent in any other language.

It is also not applicable to an association of finance companies formed for the protection of their interests, trade unions which are an association or combination of workers who are employees of a finance company, or educational bodies or consultancy services.

He said that approved micro-finance companies registered under the Finance Business Act may continue to use the words 'micro finance' as part of their names or descriptions until a proposed Micro Finance Act is enacted. Unauthorised acceptance of public deposits will be made an offence and those violating the law can be indicted in the high court.

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