Public financial literacy improves to tackle online loan sharks
Sri Lankans’ financial literacy is being improved to prevent them falling prey to online loan sharks creeping into the Internet, top Central Bank (CB) officials said.
This money lending menace has now gained a new outlook through its operations on online platforms, an independent check carried out by the Business Times revealed.
The peer to peer online money lending operations could be tackled only through creating awareness on the risk and dangers associated with the system, CB Governor Dr. Indrajit Coomaraswamy recently disclosed. It is quite tough for the CB to crack down on such online money lending operations because it has the regulatory reach only on licensed financial institutions, banks and several micro finance firms, he said.
However a new resolution and enforcement department has been established at the bank to take action against unauthorized deposit mobilisation, he said adding that it cannot interfere into money lending as it was the responsibility of the borrower to obtain loans from formal or informal channels.
A separate police unit attached to this department will carry out raids to crack down on unauthorised deposit mobilising institutions, he revealed pointing out measures have also been taken to create awareness on fraudulent pyramid schemes among the public via media campaigns, etc.
But there is no law to prevent the operations of money lenders; he added pointing out that the only way to tackle online money lending was to create awareness on negative consequences in borrowing at high interest rates.
Cashwagon. lk is one such online money lending platform that is now in operation using cutting edge technology to enable easy access for borrowers to obtain loans via its web portal.
Cashwagon focuses on online consumer financing where it offers online cash loans without any collateral, complex approval procedures or prolonged time durations within 24 hours.
“This service by Cashwagon makes it convenient for online customers to apply via computer or smart phone and obtain the required cash deposited in their accounts,” the website indicated.
It assured that, through this service, Sri Lankans can enjoy benefits of new technology to satisfy their urgent financial needs without collateral and complex procedures and paper work.
Dr. Nandalal Weerasinghe, Senior Deputy CB Governor, noted that there was no prohibition in the lending of personnel money to persons in need of cash.
He noted that Sri Lanka has a regulatory framework for banks, finance companies, rotating savings and credit associations, savings and credit cooperatives.
But the money lenders, online or otherwise do not fall into the above categories and there was no regulatory framework in existence, he said.
The Money Lending Ordinance was enacted in 1918, with subsequent amendments in 1954 and 1963.
The opening sections of the Ordinance prohibit persons who are not citizens of Sri Lanka from carrying out the business of money lending. Foreign firms and companies are also prohibited but there are certain exceptions provided in the ordinance.