The Central Bank of Sri Lanka (CBSL) has announced the implementation of the Banking (Amendment) Act, No. 24 of 2024, effective from 15 June 2024.
The key areas included in the Banking (Amendment) Act inter alia are;
- minimum licensing requirements that need to be complied with to be eligible to apply for a bank licence;
- criteria for shareholder suitability;
- empowerment for subsidiarization of foreign banks, if deemed necessary;
- enhanced measures on bank ownership;
- conduct of consolidated supervision;
- facilitate proportionality in bank supervision and regulation;
- broaden provisions on large exposures;
- strengthen provisions on related party transactions;
- strengthened governance requirements by reinforcing the assessment of the fitness and propriety of directors, chief executive officers and key management personnel of licensed banks across the banking sector, including the governance of state-owned banks;
- improved requirements on financial statements and audit and;
- strengthening capital and liquidity frameworks of banks.
According to the CBSL, these amendments were formulated with a view to further strengthening the legal and regulatory framework applicable for licensed commercial banks and licensed specialised banks (licensed banks) to enhance the resilience of the banking sector of Sri Lanka.
The Banking Act, which provides for the introduction and operation of a procedure for the licensing of persons carrying on banking business and for the regulation and control of matters relating to the business of banking, was lastly amended in 2006.
Therefore, the recent amendments were formulated considering the developments in the current regulatory framework, economic and market developments, the best practices and international standards adopted on prudential requirements to the context of the local banking sector.
In addition, the observations and comments of the relevant stakeholders, viz., the banking sector, the Panel of Auditors conducting audits of banks, other regulators and authorities were also considered, as appropriate, when drafting the amendments to the Banking Act.
Further, CBSL has issued several new Regulations/instructions to licensed banks to facilitate the implementation of the Banking (Amendment) Act.
Full statement : https://shorturl.at/WWpge (Newswire)