Beware of dubious ‘virtual’ lenders – CB warns | Sunday Observer

Beware of dubious ‘virtual’ lenders – CB warns

The Central Bank of Sri Lanka (CBSL) last week warned the public to beware of dubious unauthorised money lenders who have recently begun operations solely on an online platform.

The warning came after it was revealed that a Sri Lankan website named is marketing swift ‘short term’ loans to the public, primarily through social media, despite not being a registered financial institution under the Central Bank.

“We have received information about this website but I can confirm that it is not a institution registered with the Central Bank. We still do not have the basic details, such as the name of the company, names of its directors or where it is located to begin an inquiry into this,” CBSL Director, Department of Supervision of Non-Bank Financial Institutions, W. Ranaweera said.

He pointed out that as the Central Bank has been alerted of several scam websites that conduct lending schemes with hidden agendas, people should be vigilant especially when they give out personal information.

“From a customer’s point of view, as the risk of an unauthoriszed lending institution ripping them off compared to an unauthorised deposit taking institution is low, the Central Bank is more vigilant of the latter than the former. However, the risk is still there and the public should stay away from them,” Director, Department of Supervision of Microfinance Institutions of the Central Bank, D.A.G.K. Wijetunga said.

When the Sunday Observer contacted Cashwagon from a phone number listed on its website, the Customer Care Executive who spoke to us said short term loans could be availed up to a maximum of Rs. 30,000 within 24 hours and repayable within a month.

The disbursement of loans follows a four-step process completed online while personal details will have to be shared including that of a guarantor. The company has, however, not specified its registered address on its website.

“The name of our company is Lendtech Lanka (Pvt) Ltd. and we are registered with the Central Bank under the ‘Digital Act’ which is a new concept. If you look at the homepage of our website you will see a counter that says we have given loans to over 100,000 people so far,” the Customer Care Manager, who identified herself as Dhanani said.

She pointed out that disbursement of a loan involves a 10% processing fee calculated on the value of the loan and this will be deducted from the loan value issued. On top of that, customers will have to bear an interest charge of 1.5% a month, the Executive explained.

“We are in Town Hall, Colombo but I can’t give you the address. You don’t have to visit us as everything will be done remotely,” the manager explained. - AR