The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to introduce several extraordinary  regulatory  measures  to provide flexibility  to  Licensed Commercial Banks and Licensed Specialised Banks to provide some relief to businesses and individuals affected by the COVID-19 crisis. In deciding these measures, the Monetary Board took note of the overall resilience of the banking sector especially due to the already built-up capital buffers, the current and future liquidity levels, potential upsurge in the rising trend in non-performing loans due to the  inability  of  majority  of  borrowers  to  service  their  loans  as  usual  and  extraordinary disruptions to the functioning of the economy.

Accordingly,  the  Monetary  Board  has  decided  to  introduce  the  following  extraordinary measures  to  provide  further  space  for  banks  to  assist  COVID-19  affected  businesses  and individuals on an urgent basis.

1. Allow  Domestic  Systemically  Important  Banks  (D-SIBs)  and  non  D-SIBs  to  draw-down  their  Capital  Conservation  Buffers  by  100  bps  and  50  bps,  respectively,  tofacilitate  smooth  credit  flows  to  the  economy  and  COVID-19  affected  borrowers  to sustain their businesses in the immediate future.
2. Withdraw the requirement to classify all credit facilities extended to a borrower as non-performing when the aggregate amount of all outstanding non-performing loans granted to such borrower exceed 30% of total credit facilities.
3. Allow banks  to  recover loans  in  Rupees,  as  the  last  resort,in  circumstances  where recovery  of  loans  in  foreign  currency  is  remote,  subject  to  banks ensuring  certain conditions are met.
4. Permit banks to give an extension of 60 days, to borrowers who are not entitled to any other  concessions,  to  settle  loans  and  advances  which  are  becoming  past  due  during March 2020 and not to consider such facilities aspast due until the end of this 60 day period.
5. Allow banks to consider all changes made to payment terms and loan contracts from 16.03.2020 to 30.06.2020, due to challenges faced by customers amidst the COVID-19 outbreak as ‘modifications’ instead of ‘restructuring’ for the purpose of classification of loans & advances and computing impairment.
6. Defer  the  requirement  to  enhance  capital  by  banks  which  are  yet  to  meet  the requirement by end 2020, till end 2022.
7. Reset the timelines for addressing supervisory concerns, if necessary, by prioritizing on the  severity/importance  of  the  concerns  raised.  Banks  which  are  required  to  meet timelines  to  address  supervisory  concerns/findings  during  the  period  up  to  30  May 2020,  are  granted  a  further  period  of  3  months  for  addressing  such  supervisory concerns.
8. Extend  the  deadline  for  submission  of  statutory  returns  to  the  Bank  Supervision Department by two weeks and the publication of quarterly financial statements by one month, until further notice.

CBSL  requests  banks  toavail  of  these  relaxations  in  the  best  interest  of  supporting  their customers  and  the  economy  at  large,  the  benefits  of  which  would,  in  return,  accrue  to  the banking sector to remain resilient.