In view of the recent developments in the finance leasing business, the Governor of the Central Bank of Sri Lanka appointed a three member committee to examine and report on the irregularities and illegal activities of the finance and finance leasing businesses, and to make recommendations to curtail such activities.
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Committee to Inquire into and Report on the Irregularities and Illegal Activities of the Finance and Finance Leasing Businesses
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CBSL Commences the Process of Developing a Blockchain Technology based Know-Your-Customer Proof of Concept
The Central Bank of Sri Lanka (CBSL) entered into agreements to begin the process of developing Blockchain Technology Based Shared Know-Your-Customer (KYC) proofs of concept (POCs) on 7 July 2020. CBSL identified the potential benefit for Sri Lanka’s financial services in 2018 and initiated an inter-industry study of Blockchain Technology, with the voluntary participation of the banks as well as the IT industry. CBSL decided to pave the way for Blockchain Technology based financial service solutions in Sri Lanka developing a Shared KYC solution. The CBSL advertised inviting companies with experience in developing Blockchain Technology based solutions for Shared KYC to join this project on a voluntary basis. Upon receiving a number of applications, the CBSL selected three applicants to develop POCs concurrently.
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Extension of the Suspension of Business of Perpetual Treasuries Limited
The Monetary Board of the Central Bank of Sri Lanka, acting in terms of the Regulations made under the Registered Stock and Securities Ordinance and the Local Treasury Bills Ordinance, has decided to extend the suspension of Perpetual Treasuries Limited (PTL) from carrying on the business and activities of a Primary Dealer for a period of six months with effect from 4.30 p.m. on 05th July 2020, in order to continue the investigations being conducted by the Central Bank of Sri Lanka.
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Central Bank approved Rs. 53 billion for 20,240 COVID-19 affected Businesses
The Central Bank, in consultation with the Government of Sri Lanka, has introduced the Saubagya Covid-19 Renaissance Loan Scheme to provide working capital loans at 4% interest rates to businesses adversely affected by the COVID-19 outbreak, through Licensed Banks, thereby supporting the revival of economic activity in the country. This Loan Scheme is available for COVID-19 affected businesses with an annual turnover below Rs. 1 billion, including self-employment and individuals. The Rs. 1 billion limit of annual turnover will not be applicable to businesses engaged in tourism, exports and related logistical supplies.
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Clarification on Opening Special Deposit Accounts
The Central Bank of Sri Lanka (CBSL) wishes to categorically deny the views/concerns expressed/raised by few authorities and persons that the required due diligence processes are not followed by banks (Authorized Dealers - ADs) operating in Sri Lanka in opening and maintaining recently introduced Special Deposit Accounts (SDAs).
The Government of Sri Lanka in consultation with the Monetary Board of the CBSL has introduced the SDA with the view to seek assistance for the national effort to overcome the effects of COVID-19 outbreak by issuing Regulations dated 08.04.2020 under the provisions of the Foreign Exchange Act (FEA).
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CCPI based Inflation Declined Further in June 2020
Headline inflation as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) declined to 3.9 per cent in June 2020 from 4.0 per cent in May 2020. This was solely driven by the statistical effect of the high base prevailed in June 2019. Food inflation (Y-o-Y) increased to 10.0 per cent in June 2020 from 9.9 per cent in May 2020. Meanwhile, Non-food inflation (Y-o-Y) declined to 1.4 per cent in June 2020 from 1.6 per cent in May 2020.
The change in the CCPI measured on an annual average basis remained unchanged at 4.7 per cent in June 2020.
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The Central Bank Implements a Credit Guarantee and Interest Subsidy Scheme for Businesses affected by the COVID-19 Pandemic
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 26 June 2020, decided to implement a Credit Guarantee and Interest Subsidy Scheme to accelerate lending by banks to businesses adversely affected by the COVID-19 pandemic. This scheme, which will be launched on 01 July 2020, will operate in parallel with the Saubagya COVID-19 Renaissance Facility and the new Facility approved by the Monetary Board under Section 83 of the Monetary Law Act, within the already announced threshold of Rs. 150 billion.
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Compensation Payments to the depositors of The Finance Company PLC - Second Stage
The Central Bank of Sri Lanka (CBSL) has taken measures to commence the second stage of the compensation payments to the depositors of The Finance Company PLC (TFC) with effect from 02.07.2020. Accordingly, such payments will be taken place at 63 branches of the People’s Bank Island wide. In terms of this compensation mechanism Rs. 600,000/- is paid per depositor basis.
Under this second stage compensation to all the depositors confirmed by the TFC will be commenced from 02.07.2020.
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Statement Made by the Central Bank of Sri Lanka on Regulation and Supervision of Non - Bank Financial Institutions
The Central Bank of Sri Lanka (CBSL) has noticed several media reports that vests the responsibility of failure and subsequent cancellation of licence of several finance companies which were licensed under the Finance Business Act, No. 42 of 2011 (FBA).
The CBSL carries out the regulation and supervision of licensed finance companies (LFCs) to ensure and strengthen the stability of the LFCs and in turn the stability of the financial system, which is one of the core objectives of the CBSL. Such stability is ensured through minimum capital, minimum liquidity, and provisioning requirements; regulation of investments to reduce concentration risk and corporate Governance requirements.
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The Central Bank of Sri Lanka’s COVID-19 Relief Measures: How are we helping the Country, Economy and YOU?
This press statement aims to create public awareness about the operational and policy measures undertaken by the Central Bank of Sri Lanka thus far during 2020, to support the economy, the financial system and the general public in the midst of the COVID-19 pandemic. Being the apex financial institution of the country, the Central Bank provided its full scope of essential services to the economy and the financial system during the lockdown. The Central Bank actively took steps to ease the burden on the general public during this unprecedented disruption of global scale, while preserving the focus on its legal mandate to maintain economic, price and financial system stability.