Brush Up

Mar16 (LBO) – Sri Lanka’s Central Bank has finalised several amendments to the Banking Act that will strengthen its ability to implement regulatory directions, officials said. The Central Bank had run even run into obstacles in getting banks to comply with the recent directive to increase core capital of specialised banks to Rs1.5billion.

Ceylinco Development Bank, for example had sought a court order on the grounds that the core capital threshold was too high.

Central Bank’s legal department says the planned amendments would also clear conflicts between the Sinhala and English texts of the Banking Act.

One such issue related to the indirect shareholdings in commercial banks.

Some changes are also planned to the Monetary Law Act. One such change would allow the regulator to direct bank lending to specific economic sectors.

The amendments may be presented to Parliament as early as April.

Though the government has said that 10 percent of bank lending would be directed towards agriculture, the regulators had no legal provisions to direct lending of banks.

The amendments to the two main acts coming under the Central Bank have now almost become