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Sri Lanka's Central Bank on Friday raised the minimum capital requirement for commercial banks by 400 percent to promote a robust and stable financial system. Licensed commercial banks will have to fork out US$ 25 mn (up from US$ 5 mn) while specialised banks need US$ 15 mn (up from US$ 2 mn) to meet Central Bank's new guidelines, the bank said late Friday.
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"This policy would encourage the entry and growth of strong, competitive banks in Sri Lanka in the future.
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The Monetary Board said that existing banks will be given time till end December 2007 to meet the new requirements, "while ensuring that they meet at least 50 percent of the increase at end of 2006 and the balance 50 percent of the increase at end of 2007."
"All applicants for new banking licenses will be required to meet the new minimum capital requirements," the Director Bank Supervision Joan de Zilva said.
The ruling applies to branches of foreign banks as well.
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By complying with the new guidelines, Central Bank has l