Insurance or Hazard

Following the failure of Pramuka Bank, the Central Bank is looking again at the concept of deposit insurance. This years annual report talks of a financial safety net that exists to protect depositors. Deposit insurance is part of the safety net.

Prudential regulation and supervision is the foundation of the financial safety net.A good regulatory framework reduces bank failures.rn

rnIn 2004 central bank boosted capital adequacy and provisioning rules to international standards. It is also tightening off site and on site supervision of banks.rn

rnldblquote The two aspects have been strengthened by the central bank in the recent past,
dblquote W. A. Wijewardene, Deputy Governor, Central Bank told LBR.rn

rnldblquote We have recruited a large number of banking examiners and training them. We have also introduced a suitable mechanism to obtain information from banks regarding banks and evaluating them and making judging on impending banking failures,
dblquote he said.rn

rnFollowing the Pramuka