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| Friday, 1 August 2003 |
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Letters | |
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Please forward your letters to editor@dailynews.lk in plain text format within the e-mail message, since as a policy we do not open any attachments. Money deposits in financial institutions Money deposits/savings mobilisation will in the ultimate analysis be for the strengthening of the country's economy. The Central Bank (CB) being the watchdog of the economy has an unquestioned responsibility to regulate deposit of money by the public in financial institutions of all descriptions. This fact is highlighted by the full page notice that the CB has given the public (DN 21.07.2003). This is a follow-on of the earlier one (DN 30.01.2003). A 'financial institution' has been statutorily defined as a 'company whose business or part of whose business consists of acceptance of money by way of deposit or loan in the form of debenture or bond or in any other form and the payment of interest thereon'. However, where all formations that come within this definition should be the concern of the CB, it seems to take refuge under two statutes to the exclusion of all others in the said business thereby shunning its duty to the nation. The reason given in the notice is most childish to say the least. The notice states that the CB has power to regulate only the institutions that come under the Banking Act (No. 30 of 1988) and the Finance Companies act (No. 78 of 1988). There are many financial institutions outside these two Acts that engage in the business of taking deposit of money from the public. The word deposit is nowhere defined. In the Banking Act, it is 'acceptance of money deposits from the public for the 'banking business'. In the Finance Companies Act, it is 'the acceptance of money by way of deposit and the payment of interest thereon' for the finance business. The notice claims that, 'in order to protect the public, only certain categories of institutions are legally authorised to accept deposits of money from the public'. It gives the following data in the schedules: (A)Sch. I: Banking Act: Licensed Commercial Banks 22 Licensed Specialised Banks 13 Finance Companies Act: Registered Finance Companies 26 61 (B) Sch. II: Unlicensed/unregistered institutions 31 Add: similar institutions in list published by CB in January (DN 30.01.2003) 27 58 Difference between (A) and (B) 03 (The gap in favour of (B) will be very much bigger. All such institutions have not come under CB's scrutiny. The notice states that the computation is based on the inquiries received from the public). The notice states that the institutions in Sch. I are legally authorised to accept deposit of money from the public and that it supervises them to see that they conduct their affairs prudently and take due care in handling monies deposited by the public'. In addition, these institutions are required to publish annual audited accounts and other information to enable the public to make well-informed decisions. On the other hand what is CB's role in regard to the institutions listed in Sch. II? The notice states that they are neither licensed nor registered under the said Acts. Therefore they are not subject to the supervision and other requirements applicable to the institutions in Sch. I. However, the notice claims that the institutions in Sch II are not engaged in acceptance of money 'illegally'. The notices, it is said are published merely to aid the public to make 'informed decisions' in making deposits in them. This stand by the CB is merely to over-ride the popular cliche: 'what is not legal is illegal'. Can the CB, the undisputed guardian of the economy ignore the activities of unscrupulous financial institutions that it labels as 'not illegal' by turning a blind eye especially where their number exceeds those that are 'authorised'? This disclaimer of responsibility by the CB had been made manifest even in the past too which resulted in the great debacle of the Finance Companies in the late 80s and early 90s. Of recent origin is the Pramuka Bank episode. When interest rates fall drastically, those members of the public who live off the interest on their investments of life's savings are naturally attracted by offers of higher interest by the so-called 'unauthorised' financial institutions. It is a matter of survival for them and it is the bounden duty of the State to protect their interests. That duty of the State is entrusted to the CB and it tantamounts to dereliction if the CB does not act in the best interest of this segment of the public. It is therefore the responsibility of the CB to advise the powers that be about the loopholes in the law as it now stands and actively support to close same or originate new legislation. CB's present stand is like the police telling the public that it cannot guarantee safety from the underworld and therefore the public must take care of themselves! There is at the moment a Financial Sector Authority (FSA) in the
making. It has been reported that the financial institutions that come
under the purview of the CB will remain outside the FSA. If this is so,
suitable amendment to the Finance Companies Act should receive the most
urgent attention of the Government in order to save poor depositors from
unscrupulous financial institutions. Reference is made to my article under the above caption highlighted in your 'Letters page on July 14th. The cost of a vial of Herceptin manufactured by a Swiss firm, imported and sold by a reputed pharmaceutical company is Rs. 170,000 and not Rs. 140,000 as inadvertently stated in his article. The course of treatment had cost a close relative of mine an exorbitant sum of Rs. 750,000 which is inclusive of administering charges of a private nursing home under the care and guidance of a Consultant Oncologist. This course of treatment was recommended after completion of a
successful operation and a subsequent course of Chemotherapy treatment to
ensure and prevent all avenues of spreading of this dreaded decease, which
one wonders is really necessary. Commercial advertisements transmitted through electronic media, recommend the use of various kinds of herbal preparations, specially cosmetics and healing ointments. It is true that herbs have their medicinal properties, and are widely used in native medicine. Detergents, creams, ointments, soap, shampoos, medicaments, toothpastes etc., said to be herbal preparations, have flooded the market and are being sold at competitive prices, without the SLS certification mark, which is a necessary requirement. From a reasonable point of view, the question arises as to whether there are so much of herbs of a particular kind, to be found in Sri Lanka, to meet the demand for the raw material. To prove that herbal preparations have their actual organic properties,
the manufacturers must obtain the SLS certification mark from the Sri
Lanka Standards Institute (SLSI), which is a statutory body, to ascertain
the purity and genuineness. On the other hand, the SLSI must also make a
random check of such products in the market, before they are released for
sale. After the rash floods in Colombo in the early 1990s, the then Prime Minister ordered the authorities to dredge the canals in Colombo and also develop the rainwater disposal system. The canals were dredged in double quick time and a ten foot path on either side of the canal was cleared of all buildings and in certain places, road reservation were also made. Hundreds of families living on the banks of the canals in Narahenpita, Kirulapone, Wellawatte etc., were given land in Dehiwala and their houses were demolished. But as years passed by new squatters with the help of local politicians have once again constructed unauthorised shanties, and also started throwing domestic refuse into the canal. This could be seen at the Pamankada bridge end of Veluwanarama Road in Wellawatte. The low lying areas Reclamation Board which is responsible for the maintenance of the canals have failed in their duty to ensure that no unauthorised construction are made on the canal banks. They should appoint officers to monitor respective areas and should
make a daily inspection of the area under their purview and report any
violators to the Police. Six law books that I ordered from India arrived in two parcels a fortnight ago at the Central Mail Exchange, Colombo 10. The officers concerned in releasing the parcels said that I had to pay a sum of Rs. 19,800 i.e. for VAT 20%; PAL 1% and a clearance fee of 50 per parcel. A minor employee well-versed in the art of touting approached me with a suggestion. If I gave him Rs. 10,000 he would use his influence in clearing it immediately and that he would give me a bill of clearance of Rs. 100. Days later I was directed to the customs postal superintendent but he wasn't in his seat. I was then led to another person, obviously an officer who did not seem to be properly informed told me that if the officers said that the parcels were taxable then I have to pay. I checked with the commissioner for taxes and he said that readable
matter was exempt from VAT. On informing these errant officers they
hurridly cleared the parcels with wry smiles on their crooked faces. It is
obvious that these officers work hand in glove with the minor employees to
cheat the unwary. |
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