Sri Lanka’s Central Bank extends Amana Bank’s deadline to raise capital

Jan 30, 2017 (LBO) – Sri Lanka’s Central Bank has extended the time allocated to raise the core capital requirement of Amana Bank to 7.5 billion rupees by six months.

The bank said in a stock exchange filing that the letter issued by the Central Bank on 15 January 2017 has extended the time period from 01 January 2017 to 30 June 2017.

In terms of the Central Bank’s communication, the bank is also required to increase the capital further to 10 billion rupees by 01 January 2018.

“The bank is currently in discussion with Islamic Corporation for the Development of the Private Sector (ICD) which is the fund manager of IB Growth fund with a view to seeking participation in the proposed issue of shares,” Amana Bank said.

“A Due diligence on the bank is to continence, by the Islamic Corporation for the Development of the Private Sector, for such purpose.”

The budget 2017 proposed to increase the minimum core capital level from the current 10 billion to 20 billion rupees for all licensed commercial banks.

It also proposed to increase the minimum capital of licensed specialized banks to 7.5 billion and primary dealers to 1.5 billion rupees.

The government is of the view that consolidation of financial institutions will be beneficial in the long term and encourages voluntary consolidation especially for the private banks.

The government said it will enhance the size of the banks, facilitate the fund raising from diversified sources, enhance risk taking capacities and enable banks to participate in large state and private sector projects.

Sri Lanka’s banking sector is relatively polarized with 6 banks out of the total 34 banks in the country accounting for almost 65 percent of the assets at around 5,600 billion rupees.