Feb 08, Colombo: Sri Lanka's Central Bank has dismissed a opposition parliamentarian's call for the government to pay the monies due to the depositors of collapsed Golden Key Company since the Central Bank failed to warn the investors.
Issuing a statement Thursday, the Central Bank said the allegation made by the opposition MP that the losses to security deposit holders of the Golden Key Credit Card Company could have been averted if the Central Bank had warned them not to invest in the company, and that therefore the Government must assume the liabilities of the security deposit holders could mislead the public.
Main opposition United National Party (UNP) parliamentarian Lakshman Kiriella has said the government had failed to implement a Central Bank report, which called for the closure of the Golden key Company in 2005, but the government had not implemented the request.
Explaining the circumstances, the Central Bank said, in 2003, Golden Key Credit Card Company (GKCL) was one of the 31 institutions that had been warned by the Bank as not licensed under the Banking Act or registered under the Finance Companies Act, and therefore, the activities of such institutions were not supervised or regulated by the Central Bank.
In keeping with a Supreme Court Order, the Bank since then, had only published the names of the institutions that were being regulated and supervised by the Central Bank, and were consequently empowered to accept deposits from the public.
The Central Bank said it had published from July 2003 to December 2008 at least 210 full-page advertisements in the national newspapers on the regulated companies but GKCL was not one of them.
The Bank had given the widest possible publicity that GKCL was an unregulated financial company and the depositors invested knowing fully well that the transactions were not supervised or regulated, the Central Bank said.
Based on a complaint from public, the Monetary Board of the Bank had determined that the GKCL business did not fall under the category of finance business under the Finance Companies Act. The Monetary Board was not empowered to prevent the conduct of the credit card business of GKCL.
"At no stage did the Central Bank give any impression whatsoever, that GKCL was entitled to accept deposits under the Finance Companies Act, or that it was a company that was regulated or supervised by the Central Bank," the Bank said.
"It is clear that the allegations leveled at the Central Bank and its senior officials by the MP concerned, are without foundation and are baseless," the Central Bank statement said.