Sri Lanka’s central bank has issued a major alert on unauthorized finance activity following the discovery of illegal deposit-taking by a private company. Regulators say the findings highlight increasing risks for consumers in the unregulated financial space.
Central bank issues strict unauthorized finance alert as probe reveals illegal deposit-taking
Sri Lanka’s financial regulator has sounded a serious alarm after uncovering an unauthorized finance operation allegedly carried out by Ruwala Investment Pvt Ltd. The Central Bank of Sri Lanka (CBSL), following a detailed investigation spanning activities between 2020 and 2022, announced that the company had engaged in finance business and accepted deposits without the legal authority required under national regulations. The revelation has raised concerns about the rising number of unregulated entities that continue to target vulnerable savers seeking better returns in a challenging economic climate.
According to the central bank, the company, operating under registration number PV 00221764, had conducted a series of financial activities that fall squarely within the scope of the Finance Business Act No. 42 of 2011. This legislation sets strict guidelines for any institution that accepts public deposits or engages in lending, ensuring consumer protection and financial sector stability. CBSL stated that Ruwala Investment had violated these provisions by carrying out unauthorized business practices, including collecting funds from the public without the necessary licence or oversight.
Regulators noted that unauthorized finance activities pose significant dangers to the public, particularly because such entities do not follow transparency standards, capital adequacy rules, or safeguarding mechanisms required of licensed financial institutions. Without regulatory supervision, customers face heightened risks of losing their deposits, especially when companies collapse or operate unsustainably. In this case, the investigation determined that Ruwala Investment had taken deposits in contravention of the law, prompting decisive action from the authorities aimed at preventing further harm.
Following the findings, CBSL has issued firm directives to Ruwala Investment, instructing the company to immediately cease accepting deposits in any form. The regulator has also ordered the firm to settle all remaining deposit liabilities owed to customers. These mandatory steps reflect the central bank’s broader commitment to protecting the public from illegal financial schemes and ensuring that non-compliant institutions are held accountable. Regulators emphasized that repayment of outstanding deposits is not optional but a legal requirement designed to restore financial harm caused by the unauthorized operations.
The company’s registered address, listed as No. 03, Aluthdiulwewa, Weyaparaya, Getalawa, Galenbindunuwewa, has now been made public as part of the announcement, allowing affected depositors or interested parties to identify the institution involved. CBSL’s decision to release these details highlights the increasing transparency efforts of the financial regulator as it attempts to curb the spread of illegal lending and deposit-taking schemes in rural and semi-urban regions. Such regions are often more vulnerable to unregulated financial activity due to limited access to licensed services.
The issue of unauthorized finance has persisted for years in Sri Lanka’s informal market, with many individuals being drawn into unregulated schemes that promise attractive returns but provide little to no legal protection. Economic challenges, including rising borrowing costs and lower access to formal credit, have further contributed to the expansion of such activities. CBSL officials have repeatedly urged the public to verify the licensing status of any financial institution before depositing funds or entering investment agreements. The latest incident reinforces this ongoing warning, underscoring the importance of public awareness and due diligence.
Despite multiple public notices over recent years, unauthorized financial operators continue to emerge, often exploiting gaps in public financial knowledge. The central bank’s latest warning serves as both a corrective measure against Ruwala Investment and a broader reminder of the risks posed by unregulated institutions. CBSL has emphasized that it will continue monitoring suspicious entities and take legal action whenever necessary to safeguard the integrity of the financial system. This enforcement approach reflects a renewed determination to ensure consumer safety in an evolving economic environment.
As Sri Lanka works toward strengthening its financial sector, incidents such as this highlight the essential role of regulatory vigilance. The unauthorized finance case involving Ruwala Investment demonstrates the consequences of operating outside the legal framework and the importance of public compliance with verified institutions. Whether the company ultimately settles all outstanding deposit obligations remains to be seen, but the regulator’s intervention marks a significant step in reinforcing the protections citizens rely upon in a regulated financial ecosystem.