38  [Limited Sharing]
32.3.3.0.0.0  Assets  assigned a 10%  RSF  factor
32.3.3.1.0.0  Unencumbered loans to financial institutions with residual maturities of
less than six months
Unencumbered loans to financial institutions with residual maturities of less
than six months,  where  the loan is secured  against  Level  1 assets  and where  the
bank  has the ability  to freely  rehypothecate  the received  collateral  for the life
of the  loan.
32.3.4.0.0.0  Assets  assigned a  15%  RSF  factor
32.3.4.1.0.0  Unencumbered  Level  2A assets
32.3.4.1.1.0

(i)

(ii)

(iii)
(iv) Qualifying  marketable  securities
Marketable  securities  with a 20% risk weight  under  the Banking  Act Directions
No. 01 of 2016 on Capital Requirements under Basel III and that shall satisfy
the following conditions:
Traded in large, deep and active repo or cash markets characterised by a low
level of concentration;
Have a proven record as a reliable source of liquidity in the markets (repo or
sale)  even  during  stressed  market  conditions  (i.e. A maximum  decline  of price
or increase in haircut not exceeding 10% over a 30 -day period of significant
liquidity stress);
Not an obligation of a  financial institution or  any of its affiliated entities;
At the mark  to market value.
32.3.4.1.1.1  Issued  or guaranteed  by sovereigns
Government  of Sri Lanka  – all foreign  claims
Foreign Sovereigns - where the sovereign attracts an External Credit Rating
between A+ to A -.
32.3.4.1.1.2  Issued  or guaranteed  by central  banks
Foreign  Central  Banks  - where  the sovereign  attracts  an External  Credit  Rating
between A+ to A -.
32.3.4.1.1.3  Issued  or guaranteed  by PSEs
Domestic  and foreign  PSEs  - where PSE  attracts  an External  Credit  Rating
between AAA to AA -.


39  [Limited Sharing]
32.3.4.1.1.4  Issued  or guaranteed  by MDBs
MDBs other than MDBs listed above in 32.3.2.1.1.4 where MDBs attracts an
External Credit Rating between AAA to AA -.
32.3.4.1.2.0

(i)
(ii)
(iii)

(iv)

(v)

(i)
(ii)

(iii) Qualifying  non-financial corporate debt securities (including commercial
paper and promissory notes) and covered bonds
Shall  satisfy  the following  conditions:
Not issued  by a financial  institution  or any of its affiliated  entities;
With an External Credit Rating of at least AA -;
Traded in large, deep and active repo or cash markets characterised by a low
level of concentration;
Have a proven record as a reliable source of liquidity in the markets (repo or
sale)  even  during  stressed  market  conditions  (i.e. A  maximum  decline  of price
or increase in haircut not exceeding 10% over a 30 -day period of significant
liquidity stress);
At mark  to market  value.
In case of commercial paper  and promissory  notes:
The issuer should be  a non-financial institution.
All existing facilities obtained by the issuer from the investee bank should be
"performing"  in terms  of the Banking Act Directions on Classification,
Recognition and Measurement of Credit Facilities in Licensed Banks .
Commercial  Paper/Promissory  Notes  should  be backed  by an approved  standby
credit line supporting the issue to the full  redemption value from another
licensed bank.
32.3.4.1.3.0

(i)
(ii) Qualifying  investments  in Gilt Unit  Trust  (GUT)  backed  by GOSL
securities, subject to:
GUTs  should be  open ended mutual funds
Underlying  investment  portfolio  of GUTs  should  always  be Sri Lanka
Government Securities


40  [Limited Sharing]
32.3.4.2.0.0  All other  unencumbered  loans  to financial  institutions  with  residual
maturities of less than six months
All other  unencumbered  loans to  financial  institutions  with residual  maturities
of less than six months  not included  above  in 32.3.3.1.0.0.
32.3.5.0.0.0  Assets  assigned a 50%  RSF  factor
32.3.5.1.0.0  Unencumbered  Level  2B assets
32.3.5.1.1.0

(i)
(ii)
(iii)

(iv)

(v)

(i)
(ii)

(iii) Qualifying  non-financial corporate debt securities (including commercial
paper and promissory notes)
Shall  satisfy  the following  conditions:
Not issued  by a financial  institution  or any of its affiliated  entities;
With an External Credit Rating between A+ and BBB -;
Traded in large, deep and active repo or cash markets characterised by a low
level of concentration;
Have a proven record as a reliable source of liquidity in the markets (repo or
sale)  even  during  stressed  market  conditions  (i.e. A maximum  decline  of price
or increase in haircut not exceeding 20% over a 30 -day period of significant
liquidity stress);
At mark  to market  value.
In case of commercial paper  and promissory  notes:
The issuer should be  a non-financial institution;
All existing facilities obtained by the issuer from the investee bank should be
"performing"  in terms  of the Banking Act Directions on Classification,
Recognition and Measurement of Credit Facilities in Licensed Banks ;
Commercial  Paper/Promissory  Notes  should  be backed  by an approved  standby
credit  line, supporting  the issue  to the full redemption  value  from  another
licensed  bank.


41  [Limited Sharing]
32.3.5.1.2.0

(i)
(ii)
(iii)

(iv) Qualifying  non-financial  common  equity  shares
Shall  satisfy  the following  conditions:
Not issued  by a financial institution  or any of its affiliated  entities;
Traded at recognised  stock exchange and centrally cleared;
Traded in large, deep and active repo or cash markets characterised by a low
level of concentration;
Have a proven record as a reliable source of liquidity in the markets (repo or
sale) even during stressed market conditions (i.e., maximum decline of share
price  or increase  in haircut  not exceeding  40% over a 30-day period  of
significant  liquidity  stress).
32.3.5.1.3.0

(i)

(ii)
(iii)

(iv)

(v) Residential mortgage backed  securities (RMBS)  with a credit rating of at
least AA
Shall  satisfy  the following  conditions:
Not issued by and the underlying assets have not been originated by the bank
or any of its affiliated entities;
An External Credit Rating  of AA  or higher;
Traded in large, deep and active repo or cash markets characterised by a low
level of concentration;
Have a proven record as a reliable source of liquidity in the markets (repo or
sale)  even  during  stressed  market  conditions  (i.e., A maximum  decline  of price
or increase in haircut not exceeding 20% over a 30 -day period of significant
liquidity stress);
The underlying asset pool is restricted to residential mortgages and cannot
contain  structured  products;  the underlying  mortgages  are “full recourse’’  loans
(i.e. in the case of foreclosure the mortgage owner remains liable for any
shortfall  in sales  proceeds  from  the property)  and have  a maximum  loan-to-
value  ratio (LTV)  of 80% on average at  issuance.
32.3.5.2.0.0  HQLA encumbered for a period of six months or more and less than one
year
Any HQLA  that are encumbered  for a period  of between  six months  and less
than one  year.


42  [Limited Sharing]
32.3.5.3.0.0  Unencumbered  loans  to financial  institutions  and central  banks  with
residual maturity between six months and less than one year
Unencumbered loans to financial institutions and central banks with residual
maturities  between  six months and  less than one year.
32.3.5.4.0.0  Deposits held at other financial institutions for operational purposes
Deposits  placed  in order  to facilitate  their access  and ability  to use payment  and
settlement  systems  or make  payments  (e.g. Nostro  Accounts  and collection
accounts).
32.3.5.5.0.0  All other non HQLA not included in the above categories with residual
maturity of less than one year
Other  non HQLA  not included  in the above  categories  that have  a residual
maturity  of less than one year,  including  loans  to non-financial  corporate
clients, loans to retail customers and SME, and loans to sovereigns and PSEs. In
the case of an SME, the maximum exposure (including off balance sheet
exposure) of the lending bank to the SME shall not exceed Rs. 250 million.
32.3.6.0.0.0  Assets  assigned a 65%  RSF  factor
32.3.6.1.0.0  Qualifying  unencumbered  residential  mortgages  with  a residual  maturity
of one year or more
Unencumbered residential mortgages with a residual maturity of one year or
more that would qualify for a 50% or lower risk weight according to the
Banking  Act Directions  No. 01 of 2016  on Capital  Requirements  under  Basel
III.
32.3.6.2.0.0  Other qualifying unencumbered loans not included in the above categories,
excluding loans to financial institutions, with a residual maturity of one
year or more
Other unencumbered loans not included in the above categories, excluding
loans  to financial  institutions,  with a residual  maturity  of one year or more  that
would qualify  for a risk weight lower than 50% according to the Banking Act
Directions No. 01 of 2016 on Capital Requirements under Basel III.


43
 [Limited Sharing]
32.3.7.0.0.0  Assets  assigned an 85% RSF  factor
32.3.7.1.0.0  Cash,  securities  or other  assets  posted  as initial  margin  for derivative
contracts
Cash,  securities  or other  assets  posted  as initial  margin  for derivative  contracts and
cash or other  assets  provided  to contribute  to the default  fund of a central
counterparty  (CCP).
32.3.7.2.0.0  Other  unencumbered  performing  loans
Other unencumbered performing loans with risk weight equal or greater than to 50%
according to the Banking Act Directions No. 01 of 2016 on Capital Requirements
under  Basel  III and having  residual  maturities  of one year or
more,  excluding  loans  to financial  institutions.
32.3.7.3.0.0  Unencumbered  securities  that are not in default  and do not qualify  as HQLA
Unencumbered  securities  that are not in default  and do not qualify  as HQLA
with a remaining  maturity  of one  year or  more  and exchange -traded equities.
32.3.7.4.0.0  Physical  traded  commodities,  including  gold
Physical  traded  commodities,  including  gold.
32.3.8.0.0.0  Assets  assigned a 100% RSF  factor
32.3.8.1.0.0  All assets  that are encumbered  for a period of one  year  or more
All assets  that are encumbered  for a period  of one year  or more.
32.3.8.2.0.0  NSFR derivative assets net of NSFR derivative liabilities, if NSFR derivative
assets are greater than NSFR derivative liabilities
NSFR derivative assets net of NSFR derivative liabilities, if NSFR derivative assets
are greater than NSFR derivative liabilities.
**Derivative assets are calculated first based on the replacement cost for derivative
contracts (obtained by  marking to market) where the contract has a positive value.
When an eligible bilateral netting ( refer Banking Act Directions on Leverage Ratio
under Basel III for Licensed Commercial Banks and Licensed Specialised Banks for


under Basel III for Licensed Commercial Banks and Licensed Specialised Banks for
eligibility criteria ) contract is in place, the replacement cost for the set of derivative
exposures  covered  by the contract  will be the net replacement  cost. In
calculating  NSFR  derivative  assets,  collateral  received  in connection  with
derivative contracts may not offset the positive replacement cost amount, regardless
of whether or not netting is permitted, unless it is received in the form of cash
variation margin and meets the conditions as specified. ( refer Banking Act Directions


44
 [Limited Sharing]
on Leverage Ratio under Basel III for Licensed Commercial Banks and Licensed
Specialised Banks for conditions on cash variation ).
32.3.8.3.0.0  All other  assets not  included  in above
All other  assets  not included  in the above  categories,  including  non-performing loans,
loans to financial institutions with a residual maturity of one year or more, non -
exchange -traded equities, fixed assets, items deducted from regulatory  capital,
retained  interest,  insurance  assets,  subsidiary  interests  and defaulted  securities.
32.4.0.0.0.0  Required  Stable  Funding  – Off Balance  Sheet  Items
32.4.1.0.0.0  Irrevocable and conditionally revocable credit and liquidity facilities to any
client
Balances  of undrawn  credit  and liquidity  facilities  that are contractually
irrevocable  (committed)  or conditionally  revocable  agreements  to extend  funds in
future.
32.4.2.0.0.0  Other  contingent  funding  obligations,  including  products  and instruments
below
32.4.2.1.0.0  Unconditionally  revocable  credit  and liquidity  facilities
Balances  of undrawn  credit  and liquidity  facilities  where  the bank  has the right to
unconditionally  revoke  the undrawn  portion  of these  facilities  (e.g.,  overdraft
and credit  card undrawn portion).
32.4.2.2.0.0  Trade finance -related obligations (including guarantees and letters of credit)
Trade finance instruments consist of trade -related (import - export related)
obligations  directly  underpinned  by the movement  of goods  or the provision  of
services.  Report  up to uncovered  exposure  if such facilities  are backed  by
margin  deposits.
32.4.2.3.0.0  Guarantees  unrelated  to trade  finance  obligations
The outstanding  amount  of guarantees  unrelated  to trade  finance  obligations.
32.4.3.0.0.0  Non-contractual  obligations
32.4.3.1.0.0  Potential  requests  for debt repurchases  of the bank’s  own debt or that of related


conduits, securities investment vehicles and other such financing facilities.
32.4.3.2.0.0  Structured products where customers anticipate ready marketability, such as
adjustable rate notes and variable rate demand notes (VRDNs).
32.4.3.3.0.0  Managed funds that are marketed with the objective of maintaining a stable  value.
32.4.4.0.0.0  Any other  obligations
Other  off-balance  sheet  exposures  not covered  above.


28 June2024CENTRAT BAI\K OF SRI LAI\KA
BANKING ACT DETERMINATION No.02 of2024
AMENDMENTS TO THE BANKING ACT DETERMINATION NO. 01 OF
2019 ON ASSESSMENT OF FITNESS AND PROPRIETY OF CHIEF EXECUTIVE
OFFIC ER AI\D O FFIC ER"-,HilHil:::'
"UT IVE FUN C TI ONS IN
Banking Act Determination No. 01 of 2AI9 dated 19.12.2019 on Assessment of Fitness and
Propriety of Chief Executive Officer and Officers Performing Executive Functions in Licensed
Banks is hereby amended by replacing the Determinations 3.1 and 3.3 as given below.
3. Information
to be
furnished
and
deadline
for
submission3.1 The person proposed to be appointed or nominated as Chief
Executive Officer (CEO) or Officer Performing Executive
Functions of a licensed bank shall submit the original
Affidavit as given in Schedule I hereto, for the assessment of
fitness and propriety, before such person is appointed or
nominated to the designated post of a licensed bank.
3.3 The Company Secretary shall complete Schedule II hereto.
The Chairman and CEO shall complete Schedule III hereto,
with respect to CEO and Officers Performing Executive
Functions of a licensed bank, respectively, and forward the
Affidavit, Schedule II and Schedule III.
Mrs.KMANDaulagala
Chief Executive Officer/ Senior Deputy Governor of the
Central Bank of Sri Lanka


2
 Schedule I

Affidavit to be submitted by Chief Executive Officer and O fficers Performing Executive
Functions proposed to be appointed/nominated in  Licensed Commercial Banks  and
Licensed Specialised Banks (hereinafter referred to as licensed banks) in  terms of section s
42(2), 44A and 76H of the Banking Act
No. 30 of 1988 (as amended )

AFFIDAVIT

I ….……………………………………………………………………………… (full name),
holder of National Identity Card No.1 ……….…………………… and Passport No.
…………………….………of…….……………………………………….……………
(address), being a [Buddhist / Hindu/ Muslim/ Christian / Catholic/other……….... (please
specify)] do hereby [solemnly, sincerely and truly declare and make oath / affirm  (please specify
as appropriate)] as follows:
1 I am the [affirmant / deponent] above named .
2 I state that I have been proposed to be appointed /nominated  as the
…………...…………………………………... (designation) of
…………………………………….… (name of bank) which is a licensed commercial
bank/licensed specialised bank under the Banking Act No. 30 of 1988, (as amended ).
3 I state that I possess the following academic and/or professional qualification/s in
Banking, Finance, Economics, Accounting, Business Administration, Information
Technology, Risk Management, Law or any other relevant discipline  as may be
determined by the Central Bank of Sri Lanka according to the mandate /business model
of the bank.

Qualifications  Relevant
Discipline  Country  Name of the
Institution  Year of
Completion
Academic
(i)

(ii)

1 Not applicable for expatriates .


3
 Professional
(i)
(ii)

4 I state that I possess the following effective experience in Banking, Finance, Economics,
Accounting, Business Administration, Information Technology , Risk Management, Law
or any other relevant discipline as  may be determined by the Central Bank  of Sri Lanka ,
according to the mandate /business model  of the bank.
Descript
ion Name of the
Institution/
Own
Business  Designati
on
/Position  Nature of
Appointment
*  Work
Speciali
zation  Date of
Appointment
(dd/mm/
yyyy)  Service Period
(dd/mm/ yyyy
to dd/mm/y
yyy)
Current Positions
Directorships

Other Positions

Previous Positions
Directorships

Other Positions

* New Appointment/  Promotion/ Contract Basis/ Renewal of Contract/ Lateral Move / Other (Please
Specify)
5 I state that there is a finding/no finding by any regulatory or supervisory authority,
professional association, any Commission of Inquiry, tribunal or other body established
by law in Sri Lanka or outside Sri Lanka, to the effect that I have committed or have been
connected with the commission of any act which involves fraud, deceit, dishonesty or
any other improper conduct.
6 I state that I am subject/ not subject to any proceedings, inquiry or investigation
consequent upon being served with notice of a charge involving fraud, deceit, dishonesty
or other similar criminal activity, by any court, tribunal, regulatory authority, supervisory
authority, professional association, commission of inquiry, or any other body established
by law, in Sri Lanka or outside Sri Lanka.


4
 7 I state that I have been convicted /not been convicted by any court in Sri Lanka or outside
Sri Lanka, in respect of a crime committed in connection with financial management or
of any offence involving moral turpitude.
8 I state that I am/am not an undischarged insolvent or have been/not been declared a
bankrupt in Sri Lanka or outside Sri Lanka.
9 I state that I have failed/not failed to satisfy any judgment or order of any court whether
in Sri Lanka or outside Sri Lanka, to repay a debt2.
10 I state that I have been/not been declared by a court of competent jurisdiction in Sri Lanka
or outside Sri Lanka, to be of unsound mind.
11 I state that I have been/ not been removed or suspended by an order of a regulatory or
supervisory authority, from serving as a Director /Chief Executive Officer/Officer
Performing Executive Functions or any other officer in a licensed bank or any other
financial institution or corporate body, in Sri Lanka or outside Sri Lanka.
12 I state that I have been/not been a Director, Chief Executive Officer or have held/ not held
any other position of authority in any bank or financial institution –
(i) whose licence has been suspended or cancelled; or
(ii) which has been wound up or is being wound up, or which is being compulsorily
liquidated;
whether in Sri Lanka or outside Sri Lanka.
13 I state that to the best of my knowledge I am a fit and proper person to be
appointed /nominated  as the …………....…………………………………….
(designation) of a licensed commercial bank/licensed specialised bank in terms of the
provisions of the Banking Act, No. 30 of 1988 (as amended ).
14 I state that I am not prevented by any written law from being appointed to the above post.
15 I state that the information given in Annex I is to the best of my knowledge and belief,
true and complete.

2 Please refer 3(i ii) of the “Guidance to Duly Complete the Affidavit  and Declaration” .


5
 The averments contained
herein were read over to the
[affirmant/deponent] who
having accepted same as
true, affirmed/swore to and
placed his/her signature at
………. on this ……… day
of ……… (Month, Year)

Before me

JUSTICE OF THE PEACE
/ COMMISSIONER FOR
OATHS

 Affix stamps
as applicable


6
 Annex I
Declaration to be submitted by Chief Executive Officer and O fficers Performing
Executive Functions of Licensed Banks

DECLARATION

Name of the Bank:
    Personal Information, Qualifications and Business Transactions
1. Personal Details
1.1 (i) Name with Initials:
(ii) Title: Mr/Mrs/Ms/Dr/Prof/Other (Please
specify)  (iii) Age as at date of signing the
affidavit: (dd/mm/yyyy)
(iv) Date of Birth: (dd/mm/yyyy)  (v) Sex:
(vi) Civil Status:  (vii) Nationality:   (viii) Citizenship3:
(ix) Local/expatriate:
1.2 Contact
Details  Permanent Address:
Residential Address:
(i) Telephone  Mobile
Fixed
line
Fax
(ii) E- mail Personal
Official
1.3
 (i) Proposed Post/Designation in the bank:  (ii) Proposed date of appointment to the
Post/Designation (dd/mm/yyyy)
1.4 (i) Details of Appointment of Chief Executive Officer/Officers Performing Executive Functions
New
Appointment   Contract Basis   Lateral
Move

3 A Dual Citizen is required to state whether he/she should be considered as local or expatriate.  Passport Size
Photo

(Taken within last
6 months)


7
 Promotion   Renewal of
Contract   Other
(Please
specify)
1.5 1.5.1 Details of close relations in terms of Section 86 of the Banking Act, No. 30 of 1988  (as
amended )
(i) Full name of the Spouse:
(ii) NIC No:  (iii) Passport No:
1.5.2 Details of dependent children
(i) Full Name  (ii)  NIC No:  (iii)  Passport No:

2. Additional qualifications, in addition to the above information :
Special Assignments /
Consultancy/Advisory/Audit
Services  Name of the
Institution  Description  Service Period
(dd/mm/yyyy to
dd/mm/yyyy)
(i)
(ii)

3. Details of direct  all and/or indirect share ownership in entities, presently held.
Name of the
Institution/s  Voting/Non -
voting  No. of Shares  For Indirect
Holdings, Name
of the
Institution of
Direct Holding  Percentage
Holding
Direct  Indirect  Direct  Indi
rect

4. Business Transactions
4.1 I state that I have/do not have deposits with the licensed bank, its subsidiaries4 or associate
companies5 (If yes, please state name/s of the institution/s ).
4.2 I state that I currently have (had) the following business transactions during the two years
immediately preceding the appointment, with the licensed bank, its  subsidiaries, associate

4 ‘Subsidiary’ as defined in Section 17(3) of the Banking Act No.30 of 1988  (as amended ).

5 ‘Associate’ as defined in Section 46(1) of the Banking Act No.30 of 1988  (as amended ).


8
 companies and affiliated companies/entities, and other related parties6 of the licensed
bank .
Name of the
Institution/s  Date of
Transacti
on
(dd/mm/y
yyy) Amount as at
dd/mm/yyyy
(Rs. mn)  Classification
(Performing/
Non-
performing)  Type
and
Value
of
Collate
ral
(Rs.mn)  % of Bank’s
Regulatory
Capital /
Relevant
Entity’s
Capital  Limit  Outstandi
ng
Borrowings7

Investments8

4.3 I state that I am the Guarantor for the following business transactions.
Type of
Transaction  Name of the
Institution/s  Date of Transaction
(dd/mm/yyyy)  Amount as at
dd/mm/yyyy (Rs.mn)

5. Appointments, Shareholdings and Business Transactions of Close Relations
5.1 I state that my close relations9 are presently employed as directors, chief executive
officers, or officers performing executive functions of the following licensed banks, their
subsidiaries, associate companies, affiliated companies/entities, and other related parties
of the licensed bank, and other financial institutions as defined in the Central Bank of Sri
Lanka Act No.16 of 2023.
Name of the Close Relation  Name of the Institution  Position

5.2 I state the following details of all direct and/or indirect share ownerships in entities,
presently held by my close relations.

6 ‘Related Parties’ as defined in the Banking Act Direction s No, 11 of 2007 and 12 of 2007 on Corporate  Governance
of Licensed Banks in Sri Lanka (as amended ).
7 Shall include on -balance sheet and off -balance sheet borrowings .
8 Shall include debt instruments .
9 Close Relations as defined in the Section 86 of the Banking Act No.30 of 1988 (as amended ).


9
 Name of the
Institution/s  Voting/Non -
voting  No. of Shares  For Indirect Holdings,
Name of the Institution
of Direct Holding  Percentage
Holding
Direct  Indirect  Direct  Indi
rect

5.3 I state that my close relations  currently have  (had) the following business during the two
years immediately preceding the appointment, with the licensed bank, its subsidiaries,
associate companies affiliated companies/entities, and other related parties of the licensed
bank .
Name of
the Close
Relation  Name of the
Institution  Date of
Transaction
(dd/mm/yy)  Amount as at
dd/mm/yyyy (Rs.mn)  Type and
Value of
Collateral
(Rs mn)  % of
Bank’s
Regulat
ory
Capital
Limit  Outstanding
Borrowings8

Investments9

6. Other Information
6.1 I state that I am subject to /not subject to supervision or regulation of regulatory
authority/ies, supervisory authority/ies established outside Sri Lanka ( if the answer is
given in the affirmative, p lease specify the regulatory/ supervisory Authority ).
6.2 I state that the following information of the inquiries/investigations to which I have been
subject  to, conducted by the regulatory authority, supervisory authority, professional
association, commission of inquiry, financial institution as defined in the Central Bank
of Sri Lanka Act No.16 of 2023, or any other body established by law in Sri Lanka or
outside Sri Lanka, if any:
Year  Name of the Institution  Subject Matter  Current Status

7. Any other explanation/information in regard to the information furnished above and other
information considered relevant for assessing the suitability of the proposed person .


10
 DECLARATION:
I state that I am aware of the provisions of the Banking Act  No.30 of 1988  (as amended ) and
Direction and Determination issued thereunder , on assessment of fitness and propriety of my
position and confirm that the above information is to the best of my knowledge and belief true
and complete. I undertake to keep the licensed bank fully informed, as soon as possible, of all
subsequent events, which are relevant to the information provided above.
Date: ____________             ______________________________
     Signature of the Chief Executive Officer/ Officer Performing
Executive Functions of the  Licensed Bank


11
 Guidance to Duly Complete the Affidavit  and Declaration
 to be submitted by the Chief Executive Officers (CEOs) and  Officers Performing
Executive Functions of Licensed Banks
This guidance is issued to ensure that sufficient and accurate information is provided by banks
for assessing the fitness and propriety of CEOs and Officers Performing Executive Function s
prior to their appointment s to the respective position s.

1. Purpose of Obtaining the Affidavit  and Declaration

(i) The purpose of obtaining affidavits and declarations of CEOs and Officers
Performing Executive Functions of Licensed Banks is to enable the Bank
Supervision Department of the Central Bank of Sri Lanka to assess their fitness
and propriety  of such officers to hold the respective position in terms of the
provisions of the Banking Act No.30 of 1988  (as amended ).
(ii) Accordingly, the Bank Supervision Department requires comprehensive
information to evaluate the qualifications, experience, integrity and compliance
with the requirements specified in the Banking Act, to assess the suitability of
CEOs, and Officers Performing Executive Functions prior  to appointment of such
person to the respective positions of respective bank.
(iii) The Affidavit and Declaration submitted by the persons proposed to be
appointed/nominated shall  be the legally  binding document in the event of any
dispute /controversy.
2. Affidavit
(i) It is preferable that the Affidavit is prepared as a fresh document, based on the
format provided by the Bank Supervision Department, so as to avoid inclusion of
unnecessary words. However, if the given format is filled, all alterations, erasures
and interlineations should be initialed by the Commissioner for Oaths/Justice of
the Peace immediately after all s uch amendments.
(ii) All blank spaces should be completed appropriately.
(iii) Appropriate words should be used based on the religion of the officer. If the


(iii) Appropriate words should be used based on the religion of the officer. If the
officer refrains/objects to disclose his/her religion, a confirmation should be
submitted by the officer stating that:
• He/she is an atheist or belongs to a religion not mentioned in this Affidavit; or
• He/she objects to disclosing his/her religion.


12
 (iv) Strike -out the irrelevant word(s). If the irrelevant words are stricken out, the
Commissioner for Oaths/Justice of the Peace should place his initials immediately
after all such amendments.  If the answer is given in the affirmative, provide
relevant information.
(v) If the person is a foreigner and signs the Affidavit while overseas:
• Signature of the person should be attested by a Commissioner for Oaths or an
equivalent in the country in which he places his signature.
• Attestation should be made in front of the diplomatic , consular officer of Sri
Lanka in the country where the Officer resides or in terms of the laws applicable
in such country.
(vi) Affix a stamp for the value applicable as at the date of signing the Affidavit, if
applicable.
(vii) If the affidavit is executed in Sri Lanka, the same shall be attested by a
Commissioner for Oaths/Justice of the Peace immediately after placing the
signature of the person at ‘Before me.’
(viii) CEOs and Officers Performing Executive Functions shall submit Terms of
appointment (including designation, date of appointment, duties, responsibilities
and remuneration package).
3. Declaration
(i) All sections of the Declarations  should be :
- duly completed  and irrelevant sections, if any,  should be stated as Not
Applicable/ Nil/None.
- signed and dated.
(ii) If there is no comment it should be state as Not Applicable/ Nil/None.
(iii) Officers Performing Executive Functions shall request the  Credit Information
Bureau of Sri Lanka to send their credit report directly to the Director of Bank
Supervision via email to dbsd@cbsl.lk .


13
 Schedule II
To be filled by the Company Secretary

1. Corporate Information
Recommendation of the Nomination Committee/Appointing Authority
Name of the Licensed Bank
Full Name of the person proposed to
be appointed/ nominated as CEO or
Officer Performing Executive
Functions

Assessment Criteria  (Please specify the
specific knowledge/skills considered by
the Nomination Committee and the
Appointing Authority)
Recommendation  (Please attach minutes
of the resolution/decis ion of the
Nomination Committee and the
Appointing Authority)

2. Remarks of the Board of Directors
(1) Any other explanation / information regarding the details furnished above.
(2) Submitted to the Board of Directors of the Bank /Approval has been granted by
the Board of Directors for above proposed appointment  or nomination at the
meeting dated…………(dd/mm/yyyy)
3. I state that the affidavit has been completed in terms of Sections  42, 44A  (with respect to
licensed commercial banks), and 76H (with respect to licensed specialised banks) of the
Banking Act , No. 30 of 1988  (as amended ) and the Directions and Determinations, issued
thereunder.
Name:
Signature of the Company Secretary and the  Official Stamp :
Date :


14
 Schedule  III

For Chief Executive Officer (Local Licensed banks) - To be filled by the Chairperson

For Chief Executive Officer/Country Head (Branch of Foreign Banks) - To be filled by the
Regional Head

For Officers Performing Executive Functions - To be filled by the Chief Executive Officer

Declaration:
(1) Any other explanation / information regarding the details furnished above and other
information considered relevant for assessing the suitability of the Chief Executive
Officer/Officer Performing Executive Functions of the licensed bank.
(2)  I confirm that, in terms of Section 44A/ Section 76H read with Section 44A of the
Banking Act, No. 30 of 1988, the officer referred to above is fit and proper to be appointed
as the Chief Executive Officer/an Officer Performing Executive Functions of
………… ………………… (Name of Bank)

Date:

 Signature of the Chairperson /
Regional Head / Chief Executive
Officer and the official stamp


11 September2024CENTRAL BANK OF SRI LAIYKA
BAIIKING ACT DETERMINATION No.03 of 2024
MINIMUM NUMBER OF MT'IMBERS OF BOARDS OF DIRECTORS
OF SELECTED LICENSED BAI\KS
In the exercise of the powers conferred by Sections a2Q3) and76Tof the_Banking Act, No. 30 of
1988, as amended, the Central Bank of Sri Lanka hereby determines the minimum number of members
of the Board of Directors of Bank of Ceylon, People's Bank, National Savings Bank and Pradeshiya
Sanwardhana Bank, with a view to facilitating the effective functioning of the Board and Board Sub
Committees with sufficient number of directors of aforementioned licensed commercial banks and
licensed specialised banks (hereinafter referred to as licensed banks).
1. Empowerment 1.1 In terms of Sections 42(13) and 76H of the Banking Act, No. 30 of
1988, as amended, notwithstanding anything to the contrary in any
other written law, the Central Bank shall, from time to time, determine
the number of mernbers of the Board of Directors of a licensed bank
which number shall not be less than seven (7) in any case.
2.1 The Board of Directors of the following licensed banks shall be
constituted with the minimum number of members as given in Table I
below, subject to a maximum number of thirteen (13).
Table 1: Minimum Number of Members of the Board of Directors
Licensed Bank Minimum Number of Directors
Bank of Ceylon 10
People's Bank l0
National Savings Bank 9
Pradeshiya Sanwardhana Bank 92. Minimum
Number of
Directors
3. Effective Date of
Compliance3.1 The above licensed banks are required to comply with the requirement
stipulated in Determination2.l by 01 Jme2025.
/
hto-*a-----s-4trr.pffi"
Chairman of the Governing Board and
Governor of the Central Bank of Sri Lanka


CENTRAL BANK OF SRI LANKA
  BANKING  ACT  DETERMINATION     01 Octo ber 2024 No. 04 of 202 4

1
  APPROVED SECURITIES FOR  ACCOMMODATION  GRANTED  TO
RELATED PARTIES  OF LICENSED BANKS

The Central  Bank  of Sri Lanka  (CBSL),  with a view  to mitigating  potential  conflicts  of interest
and preventing  the extension of  more favo urable  treatment to related parties of licensed
commercial banks and  licensed  specialised  banks  (hereinafter  referred  to as licensed  banks),
and thereby  ensuring  the  safety  and soundness  of the banking  sector,  by virtue  of the powers
conferred  by Sections  47(3),  (4), (5), (6) and (11B),  and 76K of the Banking  Act No. 30 of 1988,
as amended,  hereby  issues   this Determination on  Approved Securities for Accommodation
Granted to Related  Parties  of Licensed Banks.

1. Related Parties  1.1 The “related parties” of licensed banks  for the purpose of this
Determination , are as follows :
(a) a director of a licensed bank;
(b) close relations of such director;
(c) a concern in which a director of a licensed bank has a
substantial interest, being an interest acquired either before
or after the appointment as a director of such licensed bank;
(d) a concern in which a close relation of a director of a licensed
bank has a substantial interest;
(e) a chief executive officer or an officer performing executive
functions of a licensed bank in respect of any
accommodation granted other than accommodation granted
to such officer under a scheme applicable to the employees
of such licensed bank;
(f) a shareholder of a licensed bank having material interest,
whether individual or a concern;
(g) a subsidiary or an associate company of the licensed bank;


CENTRAL BANK OF SRI LANKA
  BANKING  ACT  DETERMINATION     01 Octo ber 2024 No. 04 of 202 4

2
 (h) a holding company of the licensed bank including its
subsidiaries, excluding the parent bank and subsidiaries of a
bank incorporated outside Sri Lanka;
(i) a director of a subsidiary or an associate company of the
licensed bank;
(j) a director of a holding company of the licensed bank and its
subsidiaries;
(k) a close relation of a person specified in Determinations  1.1
(e) and (f)  above ;
(l) a concern, whose director or partner is a director of such
bank;
(m) a concern in which a material shareholder of a licensed bank
has substantial interest ; and
(n) a concern in which a close relation of an individual material
shareholder has substantial interest .

2. Approved
Securities in
respect of
Accommodation
granted  to
Related Parties  2.1 The Central Bank  of Sri Lanka  has approved the following
securities to be obtained by a licensed bank  in granting
accommodation to related parties of such bank referred to in
Determination  1.1 above as the case may be:
(a) Guarantees, provided that the accommodation granted would
not exceed 100 per cent of the Guarantee ;
(i) Sri Lanka Government Guarantees provided that such
Guarantees are reported as liabilities in the financial
statements of the Government of Sri Lanka (GOSL)
(ii) Bank Guarantees
(iii) Guarantees of international financial institutions such as
World Bank (WB), International Monetary Fund (IMF),
International Finance Corporation (IFC), Asian


CENTRAL BANK OF SRI LANKA
  BANKING  ACT  DETERMINATION     01 Octo ber 2024 No. 04 of 202 4

3
 Development Bank (ADB),  United States Agency for
International Development (USAID)
(b)  Government or Central Bank Securities provided that the
accommodation granted would not exceed 90 per cent of the
face value or market value, whichever is lower of such
securities;
(c) Cash deposits in any licensed bank (including deposits of
third parties in the lending bank subject to obtaining consent
of such party) held under lien to the order of the lending bank
provided that the accommodation granted would not exceed
90 per cent of such cash deposits;
(d)  Gold provided that the accommodation granted would not
exceed 70 per cent of the market value of such gold;
(e)  Immovable property held on freehold basis and on which a
primary mortgage has been taken by the lending bank
provided that the accommodation granted would not exceed
80 per cent of the forced sale value of such property;
(f)  Immovable property held on freehold basis and on which a
secondary mortgage has been taken by a lending bank,
subject to a primary mortgage also being obtained by the
same bank provided that the total accommodation granted
on the primary mortgage and the secondary mortgage does
not exceed 80 per cent of the forced sale value of such
property;
(g) Immovable property held on leasehold basis provided that ,
(i) the lease has been granted by a statutory body;
(ii) the unexpired period of the lease to be at least 10 years
more than the tenor of the accommodation ;
(iii) there is no prohibition on the mortgage of the leasehold
rights contained in the Deed of Lease, or if the Deed of


CENTRAL BANK OF SRI LANKA
  BANKING  ACT  DETERMINATION     01 Octo ber 2024 No. 04 of 202 4

4
 Lease requires the prior approval of the Lessor for the
mortgage of the leasehold rights such approval has been
obtained from the Lessor;
(iv) a primary mortgage has been taken on the leasehold
rights by the lending bank;  and
(v) accommodation granted does not exceed 60 per cent of
the forced sale value of such  leasehold  property.
(h)  Mortgage over vehicles provided that the accommodation
granted shall not exceed the applicable loan to value ratios
specified in the Banking Act Directions on Loan to Value
Ratios for Credit Facilities granted in respect of Motor
Vehicles , for the time being in force;
(i)  Shares of Public Companies quoted on the Colombo Stock
Exchange provided that the accommodation granted would
not exceed 50 per cent of the market value of such shares
and provided further that the licensed bank shall assess the
market value of such share s on a semi -annual basis;
(j)  Unsubordinated Corporate Debentures of a third -party
concern having an issuer rating between AAA and BBB -
issued by an acceptable credit rating agency provided that
the accommodation granted would not exceed 50 per cent of
the market value of such debentures;
(k) Life Insurance Policies issued in Sri Lanka and assigned to
the lending bank provided that the accommodation granted
would not exceed 75  per cent of the surrender value of such
policy;
(l)  Mortgage Stock in -Trade provided that the accommodation
granted would not exceed 30  per cent of the market value of
such stock -in-trade;


CENTRAL BANK OF SRI LANKA
  BANKING  ACT  DETERMINATION     01 Octo ber 2024 No. 04 of 202 4

5
 (m) Pledge of non -perishable goods of  commercial nature which
are readily marketable, excluding all manufactured foods
and other items with a limited shelf life provided that the
accommodation granted would not exceed 40  per cent  of the
market value of such goods;
(n)   Lease -backed trust certificates/lease receivables provided
that –
(i) the total accommodation granted on the lease backed
trust certificate/lease receivables shall not exceed 50 per
cent of the value of such lease-backed trust
certificates/lease receivables ;
(ii) the total accommodation granted on the lease -backed
trust certificate/lease receivables shall not exceed 50 per
cent of the aggregate amount of the total outstanding
accommodation granted to the individual company ;
(iii) lease-backed trust certificate/lease receivables shall be
based on unencumbered (performing) lease portfolio ;
(iv) Lease-backed trust certificates/lease receivables shall
be mortgaged to the lending bank ; and
(v) the lending bank should be a registered establishment
under the Finance Leasing Act No. 56 of 2000.
(o)  Corporate Guarantee s of a third -party concern , provided that
the accommodation granted would not exceed;
(i) 80% of the Guarantee of a concern with an External
Credit Rating between AAA to AA - issued by an
acceptable credit rating agency .
(ii) 60% of the Guarantee of a concern with an External
Credit Rating between A+ to BBB - issued by an
acceptable credit rating agency .


CENTRAL BANK OF SRI LANKA
  BANKING  ACT  DETERMINATION     01 Octo ber 2024 No. 04 of 202 4

6
  2.2 In the case of a concern, whose director or partner is a director of
such licensed bank, in addition to approved securities mentioned
in Determination  2.1 above , accommodation  may be granted  with
the Loan     Agreement  between  the borrower  and the licensed  bank
provided  that a specific condition is included in such loan
agreement that the borrower undertakes to provide approved
securities as specified in Determination  2.1 above , in the event of
a deterioration of the credit quality depicting a significant increase
in credit risk to the licensed bank , within 90 calendar days .
Deterioration of credit quality shall mean downgrading of the
borrower to Stage 3 in terms of the Banking Act Directions No.
13 of 2021 on “Classification, Recognition and Measurement of
Credit Facili ties in Licensed Bank s”.

3. Interpretations  3.1    For the purpose of this Determination:
(a) Acceptable credit rating agency shall mean a credit rating
agency that has been recognized as an acceptable External
Credit Assessment Institution by the Central Bank of Sri
Lanka for the purpose of Banking Act Directions No. 01 of
2016 on “Capital Requirements under Basel III for Licensed
Commercial Banks and Licensed Specialised Banks ” and
other related regulatory requirements pertaining to licensed
banks , as amended .
(b) Forced sale value shall be determined on a valid valuation
report as specified in the Banking Act Directions issued by
the Central Bank  of Sri Lanka  from time to time, on
“Regulatory Framework on Valuation of Immovable
Properties of Licensed Banks ”.


0L October 2024CENTRAL BAI\K OF SRI LAI\KA
BANKING ACT DETERMINATION No.04 of2024
4. Regulatory
Submissions
5. Revocation4.1 Licensed banks shall submit the details of related party
transactions to the Director of Bank Supervision in line with this
Determination as at the end of each quarter commencing
31.12.2024, within one month in the reporting'format specified by
the Central Bank of Sri Lanka.
5.1 The following Determinations are hereby revoked:
(a) Banking Act Determination dated 11.02.2005 made by the
Monetary Board of the Central Bank of Sri Lanka under
Sections 47(3), (4), (5) and (6) of the Banking Act No. 30
of 1988, as amended, by Banking (Amendment) Act No 02
of2005.
(b) Banking Act Determination No. 03 of 2009 dated
02.09.2009 on Lease-backed Trust Certificates/Lease
Receivables as an Approved Security for Accommodation
to any Director or Close Relation of a Director or any
Concern in which the Director has Substantial Interest.
ttl".-,a,A-ldA-:
Dr. P Nan&fafm-eerasinghe v
Chairman of the Governing Board and
Governor of the Central Bank of Sri Lanka


14 Jwe2024CENTRAL BANK OF SRI LANKA
BA.NKING ACT DIRECTIONS No.02 of2024
OFF'.SHORE BANKING BUSINESS OF I,ICENSED COMMERCIAL BANKS
In terms of the Banking (Amendment) Act, No. 24 of 2024,the demarcatioi of Domestic Banking
Unit and Off-shore Banking Unit is eliminated, and off-shore banking business is identified as a
permissible activity thatalicensed Commercial Bank (LCB) may carry out. In view of the above,
the Central Bank of Sri Lanka (CBSL) hereby issues these Directions on Off-shore Banking
Business of LCBs, with a view to facilitating the conduct of off-shore banking business with the
implementation of the Banking (Amendment) Act, No.24 of 2024.
1. Empowerment 1.1 In terms of Section a6(1) of the Banking Act No. 30 of 1988, as
amended, the CBSL may issue Directions to LCBs, regarding the
manner in which any aspect of the business of such bank or banks
is to be conducted.
2. Authorised
Businesses under
Off-shore
Banking
Business2.1In terms of Section 6 (b) and item (aa) of the Schedule II of the
Banking Act No. 30 of 1988, as amended, an LCB is permitted to
conduct off-shore banking business.
An LCB shall carry on off-shore banking business only in
designated foreign currencies.
An LCB may subject to these Directions, and such otheg terrns and
conditions, conduct all or any of the following off-shore banking
business:
(a) accept savings, time and demand deposits in any designated
foreign currency, provided that, in the case of time deposits
the value of such deposits shall not be less than 10,000.00
United States dollars or its equivalent in any other designated
foreigu curency or such higher amount as maybe determined
by CBSL;
(b) borrowings;2.2
2.3


3. Eligible
Customers for
the Purpose of
carrying on Off-
shore Banking
Business
4. Transactions
Permitted Under
Off-shore
Banking Business(c) extend accommodations; and
(d) engage in any other transaction authorised by CBSL.
2.4 [n accepting any contingent liability under 2.3 (c) above, an LCB
shall engage only in the following transactions:
(a) establish, open or advise letters of credit;
(b) issue or renew guarantees, indemnities or similar undertakings;
and
(c) acceptances.
3.1 An LCB may, subject to these Directions, engage in off-shore
banking business specified in Direction 2 with any one or more of
the following:
(a) a non-resident, subject to Direction 5.1;
(b) GBSL;
(c) an LCB;
(d) a BOI Company, subject to Direction 5.1;
(e) any resident, being an exporter of goods and services from Sri
Lanka, or any resident, being a local supplier of imported
accessories to such exporter and is settled in foreign currency
by such exporter, with the prior approval of CBSL on a case-
by-case basis; and
(f) any other resident approved by CBSL in the interest of the
national economy, subject to such conditions as CBSL may
impose.
Funds from an account maintained for the purpose of off-shore
banking business, shall not be withdrawable by cheque.
An account maintained by a customer as per Direction 3.1 shall
only be:
(a) credited with inward remittances; and
(b)lcredited or debited; as the case may be with transactions
permitted under the provisions of Foreign Exchange Act, No.
12 of 2017,with respect to off-shore banking business.4.t
4.2


5. Granting of
Accommodation
under Off-shore
Banking Business
6. Maintenance
Recordsof 6.1
7. Other
Requirements
8. Interpretations 8.15.1An LCB shall ensure to:
(a) source foreign currency to grant accommodation under off-
shore banking business shall not exert undue pressure to the
domestic foreign exchange market;
(b) grant accommodation to eligible customers where LCB is
satisfied that the customer has the capacity to repay such
accommodation in a designated foreign crrrency;
(c) implement prudent policies and procedures for granting of
accommodation and timely recovery of such
accommodation; and
(d) report to CBSL the details of accommodation granted under
off-shore banking business on a quarterly basis, as per the
reporting format given at Annexure I.
6.2Every LCB shall have appropriate procedures to identifu the
accounts that are maintained for the purpose of off-shore banking
business.
Every LCB shall duly maintain records, management information
and other documents in relation to off-shore banking business.
7.1 An LCB may maintain equity including earnings and retained
profits of off-shore banking business in designated foreign
currency, subject to adherence with the relevant regulatory and
legal requirements.
For the purpose ofthese Directions:
(a) ooOff-shore Banking Business" shall have the same meaning
as given in section 86 ofthe Banking Act, No. 30 of 1988 (As
amended).
(b) "Off-shore Banking Business" means the provision ofbanking
business by a LCB in any designated foreign currency to
eligible customers as determined by CBSL, from time to time.
(c) "BOI Company" means a company with which an agreement
has been entered into by the Board of Investments of Sri
Lanka under Section 17 of the Board of Investment of Sri


9. Discontinuation
of Regulatory
Reporting
Requirements
l0.Effective DateLankA Law No. 04 of 1978, as amended, and which have
been granted approval to transact business under oflshore
banking business.
(d) "Residenf'and oNon-resident" shall have the same meaning
as Section 86 of the Banking Act, No. 30 of 1988, as
amended.
(e) "Designated Foreign Currencies" rieans the foreign
currencies that are set out in the Banking (Off-shore Banking)
Order No. 0 1 of 2024 dated I 5.06 .2024 and any subsequent
amendments, thereto.
9.1 From the effective date of these Directions, the reporting
requirements specified' in Schedule I of these Directions, are
hereby revoked.
10.1 These Directions shall be effective from the appointed date ofthe
Banking (Amendment) Act, No 24 of 2024,on15.06.2024.
/.-->Dr. P Nandalal Weerasinghe t/
Chairman of the Governing Board and
Governor of the Central Bankof Sri Lanka


Details of Accomodation Granted Under Off-shore Banking Business rs rt ..,......


Schedule I: Discontinuations of Finnet Returns
BSD-MF-O1-BF: Balance
SheetBalance Sheet - Foreign Currency Banking
Unit (FCBU) Operations
BSD-MF-02-PF: Profit &
LossProfit & Loss- Foreign Currency Banking
Unit(FCBU) Operations
BSD-MF-04-LF: Statutory
Liquid Asset RatioStatutory Liquid Asset Ratio-Foreign
Currency Banking Unit (FCBU) Operations
BSD-AF-01-BF: Balance
SheetBalance Sheet - Foreign Currency Banking
Unit (FCBU) Operations
BSD-AF-02-PF: Profit &
LossProfit & Loss- Foreign Currency Banking
Unit @CBU) Operations


25 M*ch2024CENTRAL BANK OF SRI LANIKA
BANKING ACT DIRECTIONS No.01 of2024
LARGE EXPOSURES OF LICENSED BANKS
The Central Bank Sri Larka, having considered the possible adverse implications to the
financial system stability due to large exposures of licensed commercial banks and licensed
specialised banks (hereinafter referred to as licensed banks) hereby issues these Directions on
large exposures of licensed banks with a view to mitigating the potential credit concenkation risks
in order to ensure safety and soundness and preserve public confidence in the banking sector. The
Central Bank of Sri Lanka is empowered by the Central Bank of Sri Lanka Act, No. 16 of 2023
to issue exposure caps as a macroprudential instrument to mitigate or eliminate identified
systemic risks.
1. Empowerment 1.1 In terms of Section 46(1) of the Banking Ac| No. 30 of 1988,
as amended, to ensure the soundness of the banking system,
the Central Bank is empowered to issue Directions to all
licensed commercial banks, regarding the manner in which
any aspect of the business of such bank or banks is to be
conducted.
1.2 In terms of Section 76J(l) of the Banking Act, No. 30 of
1988, as amended, the Central Bank is empowered to issue
Directions to licensed specialised banks or to any category of
licensed specialised banks, regarding the manner in which
any aspect ofthe business of such banks is to be conducted.
2. Scope 2.1 These Directions shall be applicable to every licensed bank
incorporated in Sri Lanka and every licensed bank
incorporated or established outside Sri Lanka.


3. Effective Date of 3.1 Licensed banks shall implement these Directions on a
Compliance standalone basis commencing 01.01.2026.
3.2 Licensed banks shall implement these Directions on
consolidated basis commencing 0 1.0 1.2030.
4. Applicability 4.1 Limits on large exposures are applicable to any single
compariy, public corporation, firm, association ofpersons, or
an individual; or
4.2 in aggregate to:
(D an individual, his close relations or to a company or firm
in which he or his close relations have a substantial
interest: or,
(ii) a group of connected borrowers if at least one of the
following criteria is satisfied:
(a) Control relationship: A company and one or more of
the following:
a. its subsidiaries;
b. its holding company;
c. its associate companies;
d. a subsidiary of its holding company;
e. a company in which such company or its
subsidiary, or its holding company, or a
subsidiary of its holding company, has a
substantial interest;
f. an individual having a substantial interest in such
company and the close relations of such
individual; or,
g. any other company, in which such company
having direct or indirect control, that may satisff
one or more of the following criteria:
i. control over the voting rights of another
company, pursuant to a voting agreement with
other shareholders;


5. Large Exposure 5.1
6. Maximum Limit on
Large Exposures6.1ii. frequent interchange of key management
personnel among such company and another
company; or,
iii.significant influence by such company on
another company as identified through the
' consolidated financial statements of such
companies as per applicable Sri Lanka
accounting standards.
(b) Economic Interdependence: Licensed banks shall
assess the economic interdependencies for all
instances where the total exposure to a borrower
exceeds l|Yo of Tier 1 capital. In establishing
connectedness based on economic interdependence,
licensed banks shall consider, at a minimum, the
following criteria:
a. where 50 per cent or more of one borrower's
income/furnover per annum is derived from
transactions with another borrower; or,
b. where 50 per cent or more of one borrower's
production input per annum is obtained from
another borrower; or,
c. where one borrower has fully guaranteed the
exposure of another borrower.
Large exposures shall mean those exposures of a licensed
bank to an individual borrower or a group of connected
borrowers, which is equal to or in excess of 10 per cent of the
Tier I capital.
Maximum limit on large exposures of a licensed bank to an
individual borrower or to a group of connected borrowers
referred to in Directions 4.1 and 4.2, respectively, shall not
exceed 25 per cent of the licensed bank's Tier I capital at all
times.


7.1 7.Aggregate Limit of
Large Exposures
8. Exclusions of
Exposures from
Maximum Limits
given in Directions
6 andTThe sum total ofthe large exposures as atany given date to
any category of borrowers referred to in Directions 4.1 and
4.2, shall not exceed 55 per cent of the total exposures of the
licensed bank to all borrowers as at the end of the
immediately preceding quarter.
Rupee denominated securities issued by the Government of
Sri Lanka.
Rupee denominated securities issued by the Central Bank of
Sri Lanka.
Both Rupee and foreign currency denominated exposures
secured against the following collaterals:
(D cash;
(ii) gold, subject to a loan to value ratio of equal to or less
thanT0o/o;
(iii) guarantees issued by a Multilateral Agency, such as
World Bank, Asian Development Bank, Intemational
Financial Corporation, International Development
Association or any other Agency acceptable to the
Governing Board of the Central Bank of Sri Lar*a;
(iv) guarantees including counter guarantees issued by a
bank incorporated within or outside Sri Lanka other than
the bank taking the exposure, subject to the following:
(a) The amount of exposure that shall be excluded from
the computation of large exposures being 80 per
cent in the event the credit rating of the bank that
provides the guarantee is in the rank of Afu{ to AA-
or equivalent, or 50 per cent in the event the bank's
credit rating is in the rank of A+ to A- or equivalent.
(b) The total exposures backed by guarantees
considered for exclusion shall not exceed 100% of
Tier 1 capital base.8.1
8.2
8.3


8.4Rupee denominated exposures secured against the following
collaterals, provided that such collateral is pledged for at least
until the maturity of the exposure:
(i) Rupee denominated securities issued by the
Government of Sri Lanka or the Central Bank of Sri
Lanka;
(ii) Rupee denominated treasury guarantees, or any other
Rupee denominated guarantees issued by the
Government of Sri Lanka that are reported as liabilities
in the financial statements of the Government of Sri
Lanka.
Balances maintained in NOSTRO current accounts held with
other financial institutions for operational purposes such as
clearing and cash management excluding any balances
accumulated due to customer driven activities.
Exposures deducted from the Tier 1 capital in terms of
Banking Act Directions No. 0l of 2016 on Capital
Requirements under Basel III for Licensed Commercial
Banks and Licensed Specialised Banks.
Intraday and overnight interbank exposures, except for the
revolving ovemight placements.
Exposures to qualifuing central counterparties (QCCPs)
related to clearing activities.
Exposure of a licensed bank incorporated outside Sri Lanka
if such exposures are funded directly through funds raised
from its Head Office and/or any branchlregional office of
such bank operating outside Sri Lanka.
Licensed banks shall comply with these Directions within
one year in instances where the exposure to a borrower is
required to be revised due to a reduction in the applicable
exposure limit.8.5
8.6
8.7
8.8
8.9
q.l9.Review of
Exposures


10. Governance
Framework for
Monitoring Large
Exposures9.2 In the event a merger or an acquisition between institutional
borrowers results in existing exposures exceeding the
applicable maximum limits, the licensed banks shall reduce
such exposures to be within the applicable maximum limits
before the expiry of3 years on a staggeredbasis as approved
by the Board of Directors, from the date.of such merger or
acquisition.
10.1 The Board of Directors shall commence implementing
measures from the date of issuance of these Directions to
ensure availability of a strong governance framework for
monitoring of large exposures? as follows:
(i) establish necessary policies, procedures, processes,
systems and internal controls to ensure compliance
with these Directions;
(ii) ascertain a comprehensive bank-wide view of
significant sources of concentration risk taking into
consideration the on-balance sheet and off-balance
sheet exposures;
(iii) establish internal concentration thresholds, reflecting
the bank's risk appetite, risk profile and capital
strength which shall be regularly communicated to
and understood by relevant staff; and,
(iv) conduct effective oversight, review and monitoring
of all large exposures and to regularly report any
concerns to the Board of Directors.
10.2 Licensed banks shall maintain adequate documentation to
demonstrate the basis of determining the connected groups of
borrowers due to control relationship and/or economic
interdependence at all circumstances.
10.3 Licensed banks shall conduct periodic internal reviews on
compliance with these Directions at least on a quarterly basis.


11. Transitional
Arrangement for
Existing Borrowers10.4 Licensed banks shall implement necessary measures to
communicate the salient requirements of these Directions to
the existing/prospective borrowers.
11.1 In the event the exposures to any category of existing
borrowers referred to in Directions 4.1 and 4.2 as at
01.01.2026, exceed the maximum limit sgecified in Direction
6, licensed banks shall comply on a staggered basis in line
with the transitional iurangement in Table 1, subject to
Directions ll.2 to 11.3.
Table l: Transitional Arrangement for Complying with
Maximum Limit on Large Exposures
Ll.2 Licensed banks may grant new working capital facilities to
borrowers with excess exposures on a case-by-case basis, in
a prudent manner, until 01.01.2026, based on suitable
repayment arrangements to ensure compliance with the
transitional arrangement given in Table 1.
11.3 Licensed banks shall reduce all credit facilities granted based
on national priorities and/or national interest and for direct
funding of local infraskucture projects, with the approval of
the Central Bank of Sri Lanka in terms of the Banking Act
Directions No. 07 & No. 08 of 2007 on Maxirnum Amount
of Accommodation of Licensed Commercial Banks andExposure as at
01.01.2026 rs aYo
of Audited Tier I
CapitalExposure as a o/o of Latest Audited Tier 1
Capital during the Transitional Period
31.12.2026 31.12.2027 31.12.2028
26% - s0% 4s% 3504 25Y"
sr% -75% 6s% 50% 25%
760/o andabove 85% 60% 2504


12. Other Requirements
13. Non-Compliance
with DirectionsLicensed Specialised Banks in line with the transitional
arrangement given in Table 1.
l2.I Licensed banks shall gradually reduce the exposures to
Public Corporations to meet the maximum limit specified in
Direction 6 with respect to the aggregate exposures to all
Public' Corporations by 31.12.2030. The tansitional
arrangement to be followed in this ..gu.*d will be informed to
the respective licensed banks.
12.2 Licensed banks incorporated outside Sri Lanka may consider
subsidiaries within the own banking group as separate entities
for the purpose of these Directions until 31.12.2030 and shall
consider all subsidiaries as a part of the own banking group
from 01.01.2031for the purpose of these Directions.
12.3 These Directions shall not be applied to the government
inskuments and exposures which are subject to sovereign
debt restructuring and to the new instruments/exposures that
will be generated consequent to the sovereign debt
restructuring process. Applicability of these Directions to
such instruments and exposures will be informed upon
finalising the debt restructuring terms and conditions.
13.1 The Central Bank of Sri Lanka shall implement appropriate
regulatory actions in accordance with the Banking Act
against licensed banks failing to comply with the transitional
arrangement in Table 1, in the case of non-compliance of the
licensed banks with the maximum limit specified in Direction
6.
13.2 Licensed banks shall not increase the exposures to any
category of borrowers referred to in Directions 4.1 and 4.2
that exceed the maximum limit specified in Direction 6 on or
after 01.01.2026.
13.3 Licensed banks shall risk weight the excess eiposures at
l,250yo for capital adequacy computations in the event the


14. Regulatory
Submissions
15. Revocation of
Previous Directionst4.1exposures to any category of borrowers referred to in
Directions 4.1 and 4.2, exceed the maximum limit specified
in Direction 6 on or after 01.01.2029, until such excesses are
regularised. Such licensed banks may be subject to any other
regulatory action in accordance with the Banking Act, as
determined by the Central Bank of Sri Lanka.
Licensed banks shall submit:
(D details of large exposures to the Director of Bank
Supervision in line with these Directions, as at end of
each quarter colnmencing30.09.2024, within one month
in the reporting format as largely set out in Annex I.
(ii) the measures taken to comply with these Directions as at
end of each quarter until the effective date of these
Directions.
The following Directions are hereby revoked with effect from
0t.0r.2026.
(i) Banking Act Directions No. 07 of 2007 dated
01.11.2007 on Maximum Amount of Accommodation.
(ii) Banking Act Directions No. 08 of 2007 dated
01.11.2007 on Maximum Amount of Accommodation.
(iii) Banking Act Directions No. 02 of 2014 dated
26.06.2014 on Amendment to Banking Act Directions
No. 07 of 2007 on Maximum Amount of
Accommodation.
(iv) Banking Act Directions No. 03 of 20i4 dated
26.06.2014 on Amendment to Banking Act Directions
No. 08 of 2007 on Maximum Amount of
Accommodation.15.1


16. Interpretations 16.1 Public corporation shall mean any corporation, board or
other body which was or is established by or under any
written law other than the Companies Act, with funds or
capital wholly or partly provided by the Government.
16.2 Exposure shall mean any accommodation, i.e., any on-
balanee sheet and off-balance sheet facility including but not
limited to loans, overdrafts, advances or any commitment to
grant loans, and all debt and equity investments, excluding
equity investments in financial subsidiaries.
16.3 Accommodation shall mean any on-balance sheet and off-
balance sheet facility including but not limited to loans,
overdrafts, advances or any commitment to grant loans.
L6.4 Off-balance sheet exposure shall mean the total of the
exposure limits prevailing at any given time or the
outstanding amount, whichever is higher, computed using
the credit conversion factors applicable to such exposures in
terms of Banking Act Direction No. 01 of 2016 on Capital
Requirements under Basel III for Licensed Commercial
Banks and Licensed Specialised Banks.
16.5 Value of exposure shall mean the total ofthe exposure limits
prevailing at any given time or the outstanding amount,
whichever is higher. In the case of fully drawn term loans,
the outstanding value shall be reckoned as the amount of
exposure.
16.6 Substantial interest shall be within the meaning of Section
86 of the Banking Act, No. 30 of 1988, as amended.
L6.7 Significant influence shall mean the power to participate in
management, financial and operating policy decisions.
16.8 Tier 1 capital shall mean the Tier 1 capital before
adjustments, reported in the latest computation of the Total
Capital Ratio in terms of Banking Act Direction No. 0l of
2016 on Capital Requirements under Basel III for Licensed
Commercial Banks and Licensed Specialised Banks, as at
10


the end of the preceding financial year or immediately
preceding quarter, subject to certification by the external
auditor. In the event of losses subsequent to the audit
certification, such losses shall be deducted from Tier I
capital for the purpose of these Directions.
16.9 Govenrment of Sri Lanka shall mean the Government of Sri
Lanka, Ministries, Government Departrnents and Local and
Provincial Government Bodies.
16.10 A qualiffing central counterparty shall mean a legal person
who engages in clearing and settlement of transactions.
16. 1 1 Board of Directors in the case of licensed banks incorporated
outside Sri Lanka shall mean the Head Office or the
Regional Office of such licensed bank that supervises the
respective branch or a management committee, for which
the powers on overseeing the management have been
delegated by such Head Office or the Regional Office, as the
case may be, to act as the Board of Directors of such branch.
M"r^^-=-A
Dr.PNa@
Chairman of the Governing Board and
Governor of the Central Bank of Sri Lanka
t1


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28 June2024CENTRAL BANK OF SRI L.{NKA
BANKING ACT DIRECTIONS No.03 of2024
AMENDMENTS TO THE BANKING ACT DIRECTIONS NO. 08 OF 2019 ON
ASSESSMENT OF FITNESS AND PROPRIETY OF DIRECTORS OF LICENSED
BANKS IN SRI LAI\KA
Banking Act Directions No. 08 of 2019 dated 19.12.2019 on Assessment of Fitness and Propriety
of Directors of Licensed Banks in Sri Lanka are hereby amended by replacing Directions 2.1 and
2.3 as givOn below.
2 Information to be
fumished and
deadline for
submission2.1
2.3The person proposed to be appointed, elected or nominated as
a Director of a licensed bank shall submit the original
Affidavit as given in Schedule I hereto, for the assessment of
fitness and propriety before such person is appointed, elected
or nominated to the licensed bank.
The Cornpany Secretary shall forward the Affidavit and
Schedule II hereto with respect to the person proposed to be
appointed, elected or nominated as a Director of a licensed
bank and the continuing Directors of a licensed bank.
)
No*J^_f
Mrs.KMANDaulagala
Chief Executive Officer/Senior Deputy Governor of the
Central Bank of Sri Lanka


2
 Schedule I

Affidavit  to be submitted  by Directors  proposed to be appointed /elected/nominated  in
licensed commercial banks  and licensed specialised banks (hereinafter referred to as
licensed banks)  and the continuing Directors of licensed banks in terms of sections 42, and
76H of the Banking Act, No. 30 of 1988 (As amended)

 AFFIDAVIT

I ….………………………………………………………………………….……… (full name),
holder of National Identity Card No1.……….……………… and Passport No. ……………………
of …….…………………………………………………….…………… (address), being a
[Buddhist / Hindu/ Muslim/ Christian / Catholic/other ……………………. (please specify)] do
hereby [solemnly, sincerely and truly declare and make oath /affirm (please specify as appropriate)]
as follows:
1 I am the [affirmant / deponent] above named .
2 I state that  I have been proposed to be appointed , elected or nominated  as the
…………...………………………. (designation) of ………………………………….…
(name of bank) , which is a licensed commercial bank/licensed specialised bank under the
Banking Act, No. 30 of 1988 (as amended ).

3 I state that I possess the following academic and/or professional qualification/s in Banking,
Finance, Economics, Accounting, Business Administration, Information Technology, Risk
Management, Law or any other relevant discipline as may be determined by the Central
Bank  of Sri Lanka according to the mandate /business model  of the bank.
Qualifications  Relevant Discipline  Country  Name of the
Institution  Year of
Completion
Academic
(i)
(ii)
Professional
(i)
(ii)

1 Not applicable for expatriates.


3

4 I state that  I possess the following  effective experience in Banking, Finance, Economics,
Accounting, Business Administration, Information Technology , Risk Management, Law  or
any other relevant discipline as may be determined by the Central Bank  of Sri Lanka ,
according to the mandate /business model  of the bank .
Description  Name of the
Institution/
Own
Business  Designation
/Position  Nature of
Appointment *  Work
Specialization  Date of
Appoint
ment
(dd/mm
/ yyyy)  Service
Period
(dd/mm/
yyyy to
dd/mm/
y yyy)
Current Positions
Directorships

Other Positions

Previous Positions
Directorships

Other Positions

* Independent / Non-Independent / Executive / Non-Executive / Alternate / Ex-officio / Other (Please Specify)

5 I state that there is a finding/ no finding of any regulatory or supervisory authority,
professional association, any Commission of Inquiry, tribunal or other body established by
law in Sri Lanka or outside Sri Lanka, to the effect that I have committed or have been
connected with the com mission of any act which involves fraud, deceit, dishonesty or any
other improper conduct.
6 I state that I am subject/ not subject to any proceedings, inquiry or investigation consequent
upon being served with notice of a charge involving fraud, deceit, dishonesty or other
similar criminal activity, by any court , tribunal, regulatory authority, supervisory authority,
professional association, commission of inquiry, or any other body established by law, in
Sri Lanka or outside Sri Lanka.

7 I state that I have  been convicted/ not been convicted by any court in Sri Lanka or outside
Sri Lanka in respect of a crime committed in connection with financial management or of
any offence involving moral turpitude.


4
 8 I state that I am /am not an undischarged insolvent or have been /not been declared a
bankrupt in Sri Lanka or outside Sri Lanka.
9 I state that I have failed/ not failed to satisfy any judgment or order of any court whether in
Sri Lanka or outside Sri Lanka, to repay a debt.
10 I state that I have been/ not been declared by a court of competent jurisdiction in Sri Lanka
or outside Sri Lanka, to be of unsound mind.
11 I state that I have been/ not been removed or suspended by an order of a regulatory or
supervisory authority from serving as a Director/Chief Executive Officer/Officer
Performing Executive Functions or any other officer in a licensed bank or any other
financial institution or corpo rate body, in Sri Lanka or outside Sri Lanka .
12 I state that I have  been/ not been a Director, Chief Executive Officer or have held/not held
any other position of authority in any bank or financial institution –
(i) whose licence has been suspended or cancelled; or
(ii) which has been wound up or is being wound up, or which is being compulsorily
liquidated;
whether in Sri Lanka or outside Sri Lanka.
13 I state that to the best of my knowledge I am a fit and proper person proposed to be
appointed , elected or nominated  as an Independent Non -Executive/  Non-Independent Non -
Executive/  Executive/ Alternat e/ Ex-officio  Director / Other (specify)  of a licensed bank in
terms of the provisions of the Banking Act No.30 of 1988 (as amended ).
14 I state that I am not prevented by any written law from being appointed to the above post.
15 I state that the information given in Annex I  hereto  is to the best of my knowledge and
belief, true and complete.

The averments contained
herein were read over to the
[affirmant/deponent] who
having understood the
contents hereof and having
accepted same as true,
affirmed/swore to and
placed his/her signature at
………. on this ……… day
of ……… (Month, Year)

Before me


placed his/her signature at
………. on this ……… day
of ……… (Month, Year)

Before me

JUSTICE OF THE PEACE /
COMMISSIONER FOR OATHS  Affix stamps
as applicable


5

Annex I

                Declaration to be submitted by proposed/continuing Directors in licensed banks

Passport Size
Photo

(Taken within last
6 months)

DECLARATION
Name of the Bank:
                      Personal Information, Qualifications and Business Transactions

1. Personal Details
1.1 (i) Name with Initials:
(ii) Title: Mr/Mrs/Ms/Dr/Prof/Other
(Please specify)  (iii) Age as at date of signing the
affidavit: (dd/mm/yyyy )
(iv) Date of Birth: (dd/mm/yyyy ) (v) Sex:
(vi) Civil Status:  (vii) Nationality:   (viii) Citizenship2:
(ix) Local/expatriate:
1.2 Contact
Details  Permanent Address:
Residential Address:
(i) Telephone  Mobile
Fixed line
Fax
(ii) E- mail Personal
Official
1.3  Occupation or Profession:

2 A Dual Citizen is required to state whether he/she should be considered as local or expatriate.


6
 1.4 (i) Post/Designation proposed to be
appointed in the bank:  (ii) Proposed date of appointment to the
Post/Designation (dd/mm/yyyy)
1.5 (i) Nature of the appointment (Please mark X in relevant box(es):
Independent   Executive   Alternate
Non-Independent   Non-
Executive   Ex-officio
Senior
Director   Other (Please
Specify)
(ii) If non -independent, reasons for determining as non -independent3:
(iii) If nominated by major shareholder/s, name/s of such nominating shareholder/s:
(iv) If an Alternate, name of the Principal Director:
1.6 1.6.1 Details of close relations in terms of Section 86 of the Banking Act No.30 of 1988
(as amended )
(i) Full name of the Spouse:
(ii) NIC No: (iii) Passport No:
1.6.2 . Details of dependent children
 (i) Full Name  (ii) NIC No:  (iii)  Passport No:

2. Additional Qualifications:
Special Assignments /
Consultancy/Advisory/Audit
Services  Name of the
Institution  Description  Service Period
(dd/mm/yyyy  to
dd/mm/yyyy)
(i)
(ii)

3. Details of all direct and/or indirect share ownership in entities, presently hel d.
Name of the
Institution/s  Voting/Non -
voting  No. of Shares  For Indirect
Holdings, Name
of the Institution
of Direct
Holding  Percentage
Holding
Direct  Indirect  Direct  Indi
rect

3 Please refer the criteria for determining independence of a director specified in the Banking Act , Directions No. 11 of 2007 and
12 of 2007 on Corporate Governance of Licensed Banks in Sri Lanka  (as amended ).


7
 4. Business Transactions
4.1 I state that I have/do not have deposits with the bank, its subsidiaries4 or associate
companies5 (If yes, please state name/s of the institution/s ).
4.2 I state that I currently have (had) the following business transactions during the two years
immediately preceding the appointment, with licensed banks, their subsidiaries, associate
companies and affiliated companies/entities, and other related parties6 of the licensed bank,
and other financial institutions as defined in the Central Bank of Sri Lanka Act , No.16 of
2023.
Name of the
Institution/s  Date of
Transaction
(dd/mm/yyyy)  Amount as at
dd/mm/yyyy
(Rs. mn)  Classificatio
n
(Performing/
Non-
performing)  Type and
Value of
Collatera
l (Rs.mn)  % of Bank’s
Regulatory
Capital /Relevant
Entity’s Capital  Limit  Outstanding
Borrowings7

Investments8

4.3 I state that I am the Guarantor for the following business transactions.
Type of
Transaction  Name of the
Institution/s  Date of Transaction
(dd/mm/yyyy)  Amount as at dd/mm/yyyy
(Rs.mn)

4.4 I state that I currently  have/  do not have or have had/ have not had during the two years
immediately preceding the appointment, a material business relationship9 with the licensed
bank.

4 ‘Subsidiary’ as defined in Section 17(3) of the Banking Act No.30 of 1988 (as amended ).
5 ‘Associate’ as defined in Section 46(1) of the Banking Act No.30 of 1988  (as amended ).
6 ‘Related Parties’ as defined in the Banking Act Directions No. 11 of 2007 and 12 of 2007 on Corporate Governance of Licensed
Banks in Sri Lanka (as amended ).
7 Shall include on -balance sheet and off -balance sheet borrowings.
8 Shall include debt instruments.
9 “Material business relationship” shall mean a relationship resulting in income/non -cash benefits equivalent to 20 per cent of the


director’s annual income. Any income/non -cash benefits received by such director which are applicable on a uniform basis to a ll
non-executive directors on the board shall not be considered in calculating the annual income for this purpose.


8
 5. Appointments, Shareholdings and Business Transactions of Close Relations
5.1 I state that my close relations10 are presently employed as directors, chief executive officers,
or officers performing executive functions of the following licensed banks, their
subsidiaries, associate companies, affiliated companies/entities, and other related parties of
the licensed bank, and other financial institutions as defined in the Central Bank of Sri
Lanka Act , No.16 of 2023 .

Name of the Close Relation  Name of the  Institution  Position

5.2 I state the following d etails of all direct and/or indirect share ownerships in entities,
presently held by my close relation s.
Name of the close
relations  Voting/Non -
voting  No. of Shares  For Indirect
Holdings, Name
of the Institution
of Direct
Holding  Percentage
Holding
Direct  Indirect  Direct  Indi
rect

5.3 I state that my close  relations  currently have  (had) the following business transactions
during the two years immediately preceding the appointment, with licensed banks, their
subsidiaries, associate companies , affiliated companies/entities, and other related parties of
the licensed bank,  and other financial institutions as defined in the Central Bank of Sri
Lanka Act No.16 of 2023 .

10 Close Relations as defined in the Section 86 of the Banking Act No.30 of 1988 (as amended ). Name of
the Close
Relation  Name of
the
Institution  Date of
Transaction
(dd/mm/yy)  Amount as at
dd/mm/yyyy
(Rs.mn)  Type and
Value of
Collateral
(Rs mn)  % of Bank’s
Regulatory
Capital/relevant
entity’s capital
Limit  Outstanding
Borrowings7


9

6. Other Information
6.1 I state that I am subject to/not subject to supervision or regulation of regulatory
authority/ies, supervisory authority/ies established outside Sri Lanka  (if the answer is given
in the affirmative, please specify the regulatory/supervisory authority) .
6.2 I state that the following information of the inquiries/investigations to which I have been
subject, conducted  by the regulatory authority, supervisory authority, professional
association, commission  of inquiry , financial institution as defined in the Central Bank of
Sri Lanka Act , No.16 of 2023  or any other body established by law in Sri Lanka or outside
Sri Lanka , if any :
Year  Name of the
Institution  Subject Matter  Current Status

7. Any other explanation/information with regard to  the information furnished above and
other information considered relevant for assessing the suitability of the proposed  or
continuing director.

DECLARATION:
I state that I am aware of the provisions of the Banking Act , No. 30 of 1988 (as amended ) and the
Direction s and Determination s issued thereunder , on assessment of fitness and propriety of my
position and confirm that the above information is to the best of my knowledge and belief true and
complete. I undertake to keep the licensed bank fully informed, as soon as possible, of all
subsequent events, which are relevant to the information provided above.
Date:____________      ______________________________
 Signature of the Director  proposed  to be
appointed/elected  /nominated

Investments8


10
 Guidance to Duly Complete the Affidavit  and Declaration
to be submitted by the Proposed/ Continuing Directors of Licensed Banks  incorporated in
Sri Lanka

This guidance is issued to ensure that complete and accurate information is provided by licensed
banks for assessing the fitness and propriety of Directors, prior to his/her appointment , election or
nomination, as the case may be, to the respective licensed bank in Sri Lanka.

1. Purpose of obtaining the Affidavit  and Declaration
(i) The purpose of obtaining Affidavits and Declarations of Directors of licensed banks is
to enable the Bank Supervision Department of the Central Bank of Sri Lanka to assess
the fitness and propriety of such directors in terms of the provisions of the Banking Act ,
No.30 of 1988 (as amended ).
(ii) Accordingly, the Bank Supervision Department requires comprehensive information to
evaluate the qualifications, experience, integrity and compliance with the requirements
specified in the Banking Act, to assess the suitability of the Directors prior to their
appointments to  the respective licensed bank.
(iii) The Affidavit  and Declaration  submitted by a director shall  be legally  binding
document s in the event of any dispute /controversy .

2. Affidavit
(i) It is preferable that the affidavit is prepared as a fresh document, based on the format
provided by the Central Bank of Sri Lanka , so as to  avoid inclusion of unnecessary
words. However, if the given format is filled, all alterations, erasures and interlineations
should be initialed by the Commissioner for Oaths/Justice of the Peace immediately
after all such amendments.
(ii) All blank spaces should be completed appropriately.
(iii) Appropriate words should be used based on the religion of the officer. If the officer
refrains/objects to disclose his/her religion, a confirmation should be submitted by the
officer stating that:


officer stating that:
• He/she is an atheist or belongs to a religion not mentioned in this Affidavit; or
• He/she objects to disclosing his/her religion.


11
 (iv) Strike -out the irrelevant word(s). If the irrelevant words are stricken out, the
Commissioner for Oaths/Justice of the Peace should place his initials immediately after
all such amendments.  If the answer is given in the affirmative, provide relevant
information.
(v) If the person is a foreigner and signs the Affidavit while in overseas:
• Signature of the person should be attested by a Commissioner for Oaths or an
equivalent in the country in which he places his signature.
• Attestation should be made in front of the diplomatic , consular officer of Sri Lanka
in the country where the Director resides or in terms of the laws applicable in such
country.
(vi) Affix a stamp for the value applicable as at the date of signing the Affidavit, if
applicable.
(vii) If the affidavit is executed in Sri Lanka, the same shall be attested by  a Commissioner
for Oaths/Justice of the Peace immediately after placing the signature of the person at
‘Before me .’

3. Declaration
(i) All sections of the Declaration  should be :
- duly completed  and irrelevant sections , if any, should be  stated as Not
Applicable/ Nil/None.
- signed and dated.
(ii) If there is no comment it should  be state d as Not Applicable/ Nil/None.


12
 Schedule II

Assessment of Fitness and Propriety of Directors of Licensed Banks in Sri Lanka
Information to be submitted by the Company Secretary

1. Corporate Information

Recommendation of the Nomination Committee/Appointing Authority for
Directors
Name of the Licensed Bank
Full Name of the person proposed to be
appointed/elected/nominated or continuing as a
Director
Assessment Criteria  (Please specify the specific
knowledge/skills considered by the Nomination
Committee and the Appointing Authority)
Recommendation  (Please attach minutes of the
resolution/decision of the Nomination Committee and the
Appointing Authority)

2. Remarks of the Board of Directors
(1) Any other explanation / information regarding the details furnished above.
(2) Submitted to the Board of Directors of the Bank /Approval has been granted by
the Board of Directors for above proposed appointment, nomination or election at
the meeting dated…………(dd/mm/yyyy)

3. I state that the affidavit has been completed in terms of Sections  42 (with respect to licensed
commercial banks), and 76H (with respect to licensed specialised banks) of the Banking
Act, No. 30 of 1988 (as amended) and the Directions and Determinations, issued
thereunder.
Name:
Signature of the Company Secretary and the Official Stamp:
Date:


eT)
CENTRAL BANK OF SRI LANKA
(9 July 2024 BANKING ACT DIRECTIONS
AMENDMENTS TO DIRECTIONS ON CAPITAL REQUIREMENTS UNDER BASEL
II FOR LICENSED COMMERCIAL BANKS AND LICENSED SPECIALISED BANKS
Banking Act Directions No. 01 of 2016 on Capital Requirements under Basel III for Licensed
Commercial Banks and Licensed Specialised Banks are hereby amended as follows:
1. Appendix I and 1.1 New web-based return code 20.3.1.8.4.0 - The portion of
Appendix IV, Part III exposures guaranteed by the National Credit Guarantee
(A) Computation of Institution Limited, is inserted immediately after web-based
Risk Weighted Amount return code 20.3.1.8.3.3 as given in Annex I hereto.
for Credit Risk
2. Appendix III, Part 2.1 The Indicative List of Financial Institutions is replaced with
II(A) Computation of the following.
Total Regulatory Indicative List of Financial Institutions
Capital i) Licensed commercial banks and licensed specialised
vi) banks licensed under the Banking Act No. 30 of
1988 (as amended)
Licensed finance companies licensed under the
Finance Business Act No. 42 of 2011
Specialised leasing companies registered under the
Finance Leasing Act No. 56 of 2000
Microfinance institutions registered under the
Microfinance Act No. 6 of 2016
Insurance companies, their agents and insurance
brokers registered under the Insurance Industry Act
No. 43 of 2000 (as amended)
Primary dealers licensed under the Local Treasury
Bills Ordinance No. 8 of 1923 (as amended): and
Registered Stocks and Securities Ordinance No. 7 of
1937 (as amended) No. 04 of 2024


. Appendix IV, Part III
(C) Guideline on
Recognising Exposures
under Credit Risk
Mitigation 3.1 vii)
viii) Merchant/investment banks and venture capital
companies incorporated under the Companies Act
No. 7 of 2007
Registered market intermediaries, including margin
providers, investment managers, underwriters,
securities clearing houses, credit rating agencies,
stockbrokers/dealer companies and © managing
companies of unit trust registered under the
Securities and Exchange Commission of Sri Lanka
Act No. 36 of 1987 (as amended)
National Credit Guarantee Institution Limited
Any other financial subsidiaries/institutions
established in or outside Sri Lanka
Web-based return code 20.3.3.2.2.0 — Guarantees, Item (4)
- Risk Weights, is replaced with the following.
Risk Weights:
a)
b)
d) The protected portion is assigned the risk weight of the
protection provider.
A zero risk weight will be applied to that portion of loans
guaranteed by GOSL and CBSL.
The portion of exposures guaranteed by the Sri Lanka
Export Credit Insurance Corporation (SLECIC) and
other guarantees acceptable to CBSL will receive a 50%
risk weight.
The portion of exposures guaranteed by the National
Credit Guarantee Institution Limited (NCGIL) will
receive a 20% risk weight.
The uncovered portion of the exposure is assigned the
risk weight of the underlying counterpart.
# M4
Kao. a
Dr. P1 Nandalal Weerasinghe’
Chairman of the Governing Board and
Governor of the Central Bank of Sri Lanka
2


Annex I
Appendix I and Appendix IV
Part Ill (A) — Computation of Risk Weighted Amount for Credit Risk
Web-based Return Assets | Risk weight %
Code
20.3.1.8.4.0 The portion of exposures guaranteed by 20
National Credit Guarantee Institution
Limited


CENTRAL BANK OF SRI LANKA
30 September 2024                 BANKING ACT DIRECTIONS                         No. 05 of 2024

1

[Limited Sharing]
BANKING ACT DIRECTIONS ON
CORPORATE GOVERNANCE FOR LICENSED BANKS

The Central Bank of Sri Lanka, with a view to strengthening the corporate governance processes
and practices of the licensed commercial banks and licensed specialised banks in Sri Lanka
(hereinafter referred to as licensed banks), hereby issues these Directions to licensed banks
enhancing the overall stability of the banking sector and the financial system as a whole. Corporate
Governance processes and pract ices shall be deemed to be the management framework that
facilitates the conduct of the banking business in a responsible and accountable manner in order to
promote the safety and soundness of the individual banks, thereby leading to the stability of the
overall banking sector.
1. Empowerment
 1.1 In terms of Section 46(1) of the Banking Act, No. 30 of 1988, as
amended (Banking Act), to ensure the soundness of the banking
system, the Central Bank of Sri Lanka is empowered to issue
Directions to licensed commercial banks regarding the manner in
which any aspect of the business of such banks is to be conducted.
1.2 In terms of Section 76J(1) of the Banking Act, to ensure the
soundness of the banking system, the Central Bank of Sri Lanka is
empowered to issue Directions to licensed specialised banks or to
any category of licensed specialised banks, regarding the m anner
in which any aspect of the business of such banks is to be
conducted.
2. Scope of
Application  2.1 These Directions shall be applicable to all licensed banks.
3. Regulatory
Requirements  3.1 Licensed banks shall comply with the regulatory requirements
given in Schedules I - IV hereto .


1

SCHEDULE I

REGULATORY REQUIREMENTS ON
CORPORATE GOVERNANCE
FOR
LICENSED BANKS


2
 Regulatory Requirements o n Corporate Governance for Licensed Banks

1. Ultimate
Responsibility and
Accountability of
the Board
 The Board shall be ultimately responsible and accountable to oversee
the management of affairs and the governance framework of the bank ,
business strategy, financial soundness,  and risk management and to
ensure that the business of such bank is carried out in compliance with
all applicable laws and regulations and is consistent with safe and sound
banking practices. Directors shall make objective decisions in the
interest of bank’s depositors, creditors, shareholders,  and other
stakeholders. Any decision taken by the directors  shall  be presumed  to
be a decision  taken  by the Board of directors  (Board)  collectively,
except for a director who expressly dissents for any such decision .

1.1 Responsibilities of
the Board    The Board shall  exercise “duty of care” and “duty of loyalty” to the
bank with a view to strengthening the  safety  and soundness  of the bank
by ensuring  the implementation  of the following:
a) Approve and oversee the bank’s strategic objectives and corporate
values in terms of bank's long-term goals and ensure that  these  are
properly communicated throughout  the bank;
b) Approve  the overall  business  strategy  of the bank,  including  the
overall  risk policy  and risk management procedures and
mechanisms with measurable goals , at least for the next three  years;
c) Inculcate a strong risk governance culture by;
(i) identifying  the principal  risks  and ensuring  implementation
of appropriate  systems  to manage risks  prudently,
(ii) establishing well -defined organizational responsibilities for the
three lines of defence of the bank, viz.,
a. the business line s,
b. the risk management function and the compliance function
which are independent from the first and third lines of
defence, and,
c. the internal audit function which is independent from the


defence, and,
c. the internal audit function which is independent from the
first and second lines of defence.


3
 (iii) ensuring that the risk management, compliance,  and internal
audit functions are properly positioned, sufficiently staffed and
resourced to carry out the responsibilities independently,
objectively and effectively. The responsibilities of risk
management, compliance and internal audit functions are
provided in Schedule II , III and IV, respectively ;
(iv) defining the risk appetite of the bank aligning with the bank’s
strategic, capital,  and financial plans, which is articulated
through a Risk Appetite Statement, and,
(v) outlining the actions to be taken when stated risk appetite limits
are breached, including disciplinary actions for excessive risk
taking, escalation procedures and notifications to the Board of
directors.
d) Establish a policy to ensure that the Board is not dominated or
significantly influenced by a director or a group of directors in a
manner that is detrimental  or prejudicial  to the interests of the
depositors , creditors,  and the bank as a whole;
e) Approve  implementation  of a policy  of communication  with all
stakeholders,  including regulators, depositors,  creditors,
shareholders,  and borrowers;
f) Review the adequacy and the integrity of the bank’s internal control
systems and management  information  systems;
g) Ensure implementation of effective control systems for managing
the related party exposures and avoiding any conflicts of interest
that may arise from related party transactions;
h) Approve and oversee the business continuity and disaster recovery
plans to ensure financial stability, operational resilience and
preserve critical operations and services including core -banking
systems during any disruptive event;
i) Oversee the approach to remuneration, including monitoring and
reviewing remuneration and ensure alignment of remuneration with
bank’s risk culture and risk appetite;


4
 j) Identify and designate key management personnel,  who are in a
position  to;
(i) significantly influence over policies,
(ii) direct activities, and,
(iii) exercise control over business activities, operations,  and risk
management.
k) Define the areas of authority and key responsibilities for the Board
of directors themselves and  for the Chief Executive Officer (CEO)
and the key management  personnel;
l) Ensure  that there  is appropriate  oversight  of the affairs  of the bank
by CEO and key management              personnel,  who is consistent  with the
Board's strategies and policies;
m) Periodically assess the effectiveness of the Board of directors’ own
governance practices, including:
(i) the selection, nomination and election of directors, CEO,  and
key management personnel;
(ii) the management of conflicts of interests: and,
(iii) identification of weaknesses and implementation of
improvements where necessary;
n) Approve the criteria  for self-assessment  to be undertaken  by each
director annually and maintain records  of such assessments.
o) Ensure  that the bank  has an appropriate succession  plan for CEO and
the key management personnel as explained in  Direction 6.4 i);
p) Meet regularly, on a needs basis, with CEO and the key
management personnel to review policies, establish  communication
lines  and monitor  progress  towards  corporate  objectives;
q) Keep abreast of material changes in the regulatory environment  and
ensure  that the bank  maintains  an effective  relationship  with
regulators;
r) Exercise  due diligence in  the hiring  and oversight  of external
auditors;
s) Conduct itself in a professional and an ethical manner and shall not
receive any undue financial or non -financial benefits including