Regulations issued by the Central Bank to the banking and financial sector should be complied to ensure financial system stability. Such a measure should benefit small and medium sector enterprises, said Central Bank Governor Dr. Nandalal Weerasinghe.
He was addressing the ‘Policy Agenda for 2025 and Beyond’ unveiled on Wednesday.
“Certain banking and financial institutions are slow to comply with regulations issued by the Central Bank. We will not hesitate to take stern action if they continue to be non-complaint,” Dr. Weerasinghe said.
Following non-compliance of banking and financial sector standards, some Banks and financial institutions faced difficulties leaving many depositors in the lurch and their hard earned money going to waste.
Many small and medium sector enterprises in Sri Lanka had to close down after the Easter Sunday attacks, the global pandemic and the economic crisis in 2022.
Finance Companies sector also recorded a steep recovery in total loans and advances, while profitability indicators improved in 2024 according to the Policy Agenda of the Central Bank.
Financial markets operated with low stress as macro-financial conditions and the confidence of market participants continued to improve, the Bank stated.
The Central Bank continued to strengthen the regulatory framework of the financial sector to ensure the safety of financial institutions
The legal and regulatory framework of Licensed Banks was strengthened through the Banking (Amendment) Act and necessary Directions were issued to licensed banks to facilitate the effective implementation of the amendments. The Banking Act Directions on large scale exposure, corporate governance, liquidity ratios, related party transactions and offshore banking business were issued to Licensed Banks.
Further, the Central Bank developed the Bank Recapitalisation Strategy in line with the roadmap for the restructuring and recapitalisation of nine large domestic banks to strengthen financial system stability through an adequately capitalised banking system.
Depositor-wise Data Collection System was also initiated to cover all Licensed Banks and Licensed Finance Companies (LFCs) to enhance the effectiveness and efficiency of the compensation payment mechanism under the Sri Lanka Deposit Insurance Scheme (SLDIS), ensuring accurate, timely and streamlined management of depositor information.
The Central Bank achieved a significant milestone in 2024 in strengthening the resolution framework under the Banking (Special Provisions) Act (BSPA).
