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Sri Lanka’s Central Bank is contemplating a move to lift the minimum capital requirement of licensed commercial banks to US$ 20 mn. Sri Lanka’s Central Bank is contemplating a move to lift the minimum capital requirement of licensed commercial banks to US$ 20 mn. Treasury Secretary and member of the Monetary Board, the decision making body of the Central Bank of Sri Lanka, Dr. P B Jayasundara said the move is a prudential measure to ensure the ‘soundness and safety’ of the banking system.

Capital requirements for licensed commercial banks are currently capped at US$ 5 mn.

Sri Lanka’s capital requirements are some of the lowest in the region. India for instance, sets a minimum requirement of US$ 20 mn for each branch, while in Pakistan its US$ 10 mn for each bank.

If the Monetary Board gets its way, the move could lead to long felt consolidations within the banking industry.

Jayasundara himself dropped a hint: “there are some banks that will find it difficult to meet this target, specially the smaller banks. So they will have to merge.”

Sri Lanka has 22 commercial banks and 14 licensed specialized banks at pre