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Central Bank refutes allegations by Kiriella

Tue10162018

Last update1:20:31 UTC 2018


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Central Bank refutes allegations by Kiriella

cb 1

The Central Bank has refuted the allegation made by the UNP MP Lakshman Kiriella that losses to security deposit holders of The Golden Key Credit Card Company Limited (GKCL) could have been averted if the Central Bank had warned them not to invest in the GKCL, and therefore the Government must assume the liabilities of the security deposit holders.

 

The Central Bank in a statement in this connection says that on 23rd July 2003, the Central Bank published an advertisement wherein the public was informed that the 31 institutions including Golden Key Credit Card Company Limited were neither licensed under the Banking Act nor registered under the Finance Companies Act, and therefore the activities of such institutions were not supervised or regulated by the Central Bank.

 

It says that in that context, any person who transacted business with the GKCL would have done so, fully aware that GKCL was not an institution that was regulated or supervised by the Central Bank.

 

The Bank points out that in 2005, based on a complaint made by a member of the public, the Central Bank examined the business model of GKCL to ascertain as to whether it was carrying on finance business, as contemplated in the Finance Companies Act. The examination culminated with submissions being made to the top management of the Central Bank in late 2006, on behalf of the GKCL and its Chairman, Lalith Kotelawala, by their Senior Legal Counsel, Wijedasa Rajapaksha PC.

 

The Bank says that after assessing the entirety of the material before the Central Bank, and the submissions made by the legal counsel of GKCL, the Monetary Board determined that the business carried out by the GKCL did not fall under the category of finance business, as contemplated under the Finance Companies Act, and that accordingly the Monetary Board was not empowered to prevent the conduct of the credit card business of GKCL.

 

It states that nevertheless, 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.

 

In the light of the above, the Bank says 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.(niz)

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