8. Sanctions on Nnon- compliance with these DirectionsMONETARY BOARDCENTRAL BANK OF SRI LANKABANKING ACT DIRECTIONS No. 06 of 2019approval on a case-by-case basis.6.2.2 Authorized Persons referred under l.l(ii)(a) above, who are currently engaged in transacting business under 1.1 (i) above, shall obtain the relevant qualifications as specified in 6.2.1 above, within one year from the date of these Directions.6.2.3 Any new appointment of Authorized Persons referred under 1 .l(ii)(a) above to engage in transacting business under 1.1 (i) above, shall be approved by the Board of Directors of the licensed banks, if such Authorized Persons do not have the relevant qualifications as specified in 6.2.1 above, at the time of such appointments.6.2.4 Further, Authorized Persons referred in 6.2.3 above shall obtain the relevant qualifications as specified in 6.2.1 above, within one year from the date of such appointment.7.1 Authorized Persons referred in Direction under l.l(ii)(a) above shall submit a Declaration to the Director of Bank Supervision, through the Chief Executive Officer of the respective licensed bank, as per the format set out in Annex I.7.2 Licensed banks shall submit to the Director of Bank Supervision, the particulars of Authorized Persons, referred under 1 .l(ii)(a) above, as at the date of these Directions, as per the attached format in Annex II. Any changes in personnel or in the particulars provided shall be informed to the Director of Bank Supervision within a period not exceeding two weeks from such change.8.1 In the event any licensed bank and/or Authorized Person fails to comply with these Directions, the Monetary Board may, after conducting an investigation, take any one or more of the following actions as it may consider necessary:(i) direct the licensed bank to suspend or remove any Authorized Person, who has been in non-compliance with these Directions, from performing any function in relation to treasury operations in the respective licensed


from performing any function in relation to treasury operations in the respective licensed bank,21


MONETARY BOARD CENTRAL BANK OF SRI LANKAAugust 2019BANKING ACT DIRECTIONS No. 06 of 2019(ii) assesse the officers performing executive functions as not fit and proper to continue in the capacity of an officer performing executive functions,(iii) suspend the Authorized dealership, Primary dealership or any other dealership licence/approval granted by the Central Bank of Sri Lanka,(iv) reduce the Net Open Position limits and/or other trading limits of the non-compliant licensed bank,(v) cancel the Authorized dealership, Primary dealership or any other dealership license/approval granted by the Central Bank of Sri Lanka,(vi) reprimand any Authorized Person who has been in non- compliance with these Directions, and(vii) any other regulatory sanctions as deemed fit by the Monetary Board.9. Revocation of9.1 The following Directions/Circulars are hereby revokedDirections(i) No. 03 of 2009 on Risk Management Relating to Foreign Exchange Business of Licensed Commercial Banks.(ii) No. 01 of 2012 on Foreign Exchange Trading Activities of Licensed Commercial Banks in Sri Lanka.(iii) Circular No. 02/17/600/0014/003 on Declaration to be Submitted by Persons Engaged in Foreign Exchange Business.Dr. Indrajit CoomaraswamyChairman of the Monetary Board and Governor of the Central Bank of Sri Lanka22


Annex ITo: Director of Bank SupervisionName of Bank:.....................................................................................................................Declaration to be submitted by the Persons engaged in transacting business in terms of the Banking Act Directions No. 06 of 2019 on Market Conduct and Practices for Treasury Operations of Licensed Banks in Sri LankaI, ..........................................................................................................................................(full name)holder of National Identity Card No. I Passport No.........................................................................of....................................................................................................................................................... ............................. (address)being a (Buddhist / Hindu do hereby solemnly, sincerely and truly declare and affirm / Christian / Catholic / Muslim make oath and state) as follows:1. 1 am the..............................................................................................................(designation)of..................................................................(name of bank) which is a licensed commercialbank under the Banking Act, No. 30 of 1988.2. I possess the following academic and/or professional qualification / s in terms of Directions 6.2.1 of the Banking Act Direction No. 06 of 2019 on Market Conduct and Practices for Treasury Operations of Licensed Banks in Sri Lanka: / [I engaged in transacting business under 1.1 (i) of above Directions as at.................... and will obtainthe relevant qualifications as specified in 6.2.1 of the aforementioned Banking Act, Direction on or before..........................]3. I am in possession of the following qualification /s in addition to (2) above:4. The effective experience that I possess in banking, finance, business or administration or of any other relevant discipline is as follows:5. I


banking, finance, business or administration or of any other relevant discipline is as follows:5. I shall undergo continuous training through participation in training programs that are appropriate and sufficient for the functions or activities 1 am involved in / expected to be involved in, and conducted by appropriate professional, academic or educational institutions.6. I have not been found guilty by any regulatory or supervisory authority, professional association, any Commission of Inquiry, tribunal or other body established by law in Sri Lanka or abroad, to the effect that I have committed or have been connected with the 23


commission of, any act which involves fraud, deceit, dishonesty or any other improper conduct.7. 1 have not been found guilty, after being subject to an investigation or inquiry consequent upon being served with notice of a charge involving fraud, deceit, dishonesty or other similar criminal activity or improper conduct, by any regulatory authority, supervisory authority, professional association, any Commission of Inquiry, tribunal or other body established by law, in Sri Lanka or abroad.8. 1 have not been convicted by any Court in Sri Lanka or abroad in respect of a crime committed in connection with financial management or of any offence involving moral turpitude.9. I am not an undischarged insolvent nor have I been declared a bankrupt in Sri Lanka or abroad.10. I have not failed, to satisfy any judgment or order of any Court whether in Sri Lanka or abroad, or to repay a debt.11. I have not been declared to be of unsound mind by a Court of competent jurisdiction in Sri Lanka or abroad.12. 1 have not been removed or suspended by an order of a regulatory or supervisory authority from serving in a licensed bank or any other financial institution in Sri Lanka or abroad.Declaration to be filled by the Person engaged in transacting business in terms of the Banking Act Directions No. 06 of 2019 on Market Conduct and Practices for Treasury Operations of Licensed Banks in Sri LankaI am the [affirmant / deponent] above named and 1 confirm that the information contained herein are to the best of my knowledge and belief, true and complete and also 1 undertake to inform of any change of any of the above information, within a period not exceeding one week from such change.Date :.........................  ...................................................................................................................SignatureName :TO BE FILLED BY THE CHIEF EXECUTIVE OFFICERAny other explanation / information in regard to the information furnished above and other information


other explanation / information in regard to the information furnished above and other information considered relevant for assessing the suitability of the person engaged in the foreign exchange business.Date :Signature of Chief Executive OfficerName :24


Annex IIPersons engaged in transacting business in terms of the Banking Act Directions No. 06 of 2019 on Market Conduct and Practices for Treasury Operations of Licensed Banks in Sri LankaName Date ofBirthAcademic/ Educational QualificationsProfessionalQualificationsDate of Joining the BankExperience in transacting business under 1.1 (i) of the above Directions
25


MONETARY BOARI)
CENTRAL BANK OF SRI LANKA
BANKINGACT DIRECTIONS tQ December 2019 No.07 of 2019
AMENDMENTS TO REGULATORY FRAMEWORI( ON VALUATION OF
IMMOVABLE PROPERTIES OF LICENSED COMMERCIAL BANKS AND LICENSED
SPECIALISED BAIIKS
In the exercise of the powers conferred by Sections a6(1) and 76(J)(1) of the Banking Act, No. 30
of 1988, the Monetary Board hereby issues the following amendments to Banking Act Directions
No. 01 of 2014 on the Regulatory Framework on Valuation of Immovable Property of Licensed
Commercial Banks and Licensed Specialised Banks, hereinafter referred to as licensed banks.
Accordingly, the following Directions of the Banking Act Directions No. 01 of 2014 on the
Regulatory Framework on Valuation of Immovable Property of licensed banks shall be replaced
as follows:
5. Eligibility
Criteria for
Valuers5.1 Every licensed bank shall ensure that:
a) eligibility criteria for valuers are set out as follows:
A. A member of the Institute of Valuers of Sri Lanka (IVSL)
who shall be:
i. A Fellow Member; or
ii. A Professional Associate Member with 5 years of
experience in such grade of membership.
For the pu{pose of determining number of years of
experience in the grade of Professional Associate
Membership, the transitional provisions stated in Section
24 of the IVSL amendment Act. No. 9 of 2019, shall be
applicable.
B. A member of the Royal Institution of Chartered Surveyors of
the United Kingdom (RICS) who shall be:
i. A Fellow Member of RICS and a member of IVSL; or
ii. Other members of RICS who have passed the final
examination of RICS in the General Practice Division
with 05 years of experience in such grade of membership
and a member of IVSL.


6.1 6.Threshold for
internal and
external
valuation
reports
7. Frequency of
valuationb) valuers selected for the panel of valuers of the licensed banks as
per the qualifications set out in Direction 5.1 a) above shall acquire
Continuous Professional Development as approved/ recommended
by the respective professional body and
c) internal valuation of immovable property is undertaken by valuers
who satisfy the eligibility criteria set out in Direction 5.1 a) above.
In respect of immovable property obtained/to be obtained as collaterals
against all performing loans and advances, banks shall establish an
appropriate threshold for intemal and extemal valuation as per the
bank's policy.
In respect of non-performing loans, where the capital outstanding
amount is less than Rs. 10,000,000 or 0.lo/o of the bank's capital base,
whichever is less, an internal valuation report may be obtained.
Licensed banks shall obtain an extemal valuation report in the case of
obtaining valuation for a foreclosed property where the capital
outstanding amount is over Rs. 5,000,000 or 0.1% of the bank's capital
base, whichever is less.
7.1 The frequency of valuation as referred to in Direction 2.2 (f) of the
cited Direction shall be as follows:
a) Valuation of immovable property obtained as collateral against
loans and advances which are non-performing shall be made at the
frequency as follows for any regulatory purpose.
i. In respect of credit facilities granted against residential
property which is occupied by the borrower for residential
pulposes: a report that is not more than five years old.
ii. All other credit facilities: a report that is not more than four
years old.
b) Revaluation of immovable property as referred to in Directions 3.1
b) and c) cited Direction shall be made in line with the internal
policies approved by the Board of Directors or depending on any
significant and volatile changes in fair value of such immovable
property are experienced. However, such gains can only be


property are experienced. However, such gains can only be
included in Tier 2 capital once in three years.6.2
6.3


c) Valuation of immovable property obtained as collateral against
loans and advances which are performing, shall be made at the
time of initial granting and at the time of any subsequent
enhancement of credit facilities.
Indraj it Coomaraswarny
Chairman of the Monetary Board and
Goyernor of the Central Bank of Sri Lanka


lq December 2019MONETARY BOARD
CENTRAL BANK OF SRI LANKA
BANKING ACT DIRECTIONS No. 08 of 2019
ASSESSMENT OF FITNESS AND PROPRIETY OF DIRE,CTORS OF
LICENSED BANKS IN SRI LANKA
In terms of the powers conferred by Sections a6(1) and 76J(1) of the Banking Act No. 30 of 1988,
as amended, the Monetary Board hereby issues these Directions to licensed commercial banks and
licensed specialised banks, hereinafter referred to as licensed banks, on assessment of fitness and
propriety of Directors and information to be submitted by the persons proposed to be appointed,
elected or nominated as a Director of a licensed bank in Sri Lanka for the purpose of obtaining
approval of the Director of Bank Supervision in terms of Section 42 read with SectionT6H of the
Banking Act.
Empowerment 1.1
Information to
be fumished and
deadline for
submissiont.2In terms of Sections 46(l) and 76J(1) of the Banking Act,
in order to ensure the soundness of the banking system,
the Monetary Board is empowered to issue Directions to
all or any licensed bank, regarding the manner in which
any aspect of the business of such banks is to be
conducted.
In terms of Sections 42(1) and76H of the Banking Act, no
person shall be appointed, elected or nominated as a
Director of a licensed bank or continue as a Director of
such bank unless that person is a fit and proper person to
hold office and ifhe is notprevented from doing so by any
provision of this Act or of any other written law.
The 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, before such
person is appointed to the designated post of a licensed
bank.2.1


lq December 2019MONETARY BOARI)
CENTRAL BANK OF SRI LANKA
BANKING ACT DIRECTIONS No.08 of2019
2.2
2.3The Affidavit shall be completed in line with the attached
Guidelines for completing same.
The Company Secretary shall attest and forward the
Affidavits with respect to the Directors of a licensed bank
in order to assess the fitness and propriety of the proposed
persons.
The Affidavit should be submitted under confidential
cover to the Director of Bank Supervision 15 working
days prior to the expected date of appointment.
Licensed banks shall inform the Director of Bank
Supervision of the retirement/resignation/removal of
Directors of a licensed bank with reasons within 3 working
days of such retirement/resignation/removal.
The Director of Bank Supervision shall assess the fitness
and propriety of the proposed person based on the criteria
set out in the Banking Act and the Directions issued
thereunder.
The Director of Bank Supervision shall assess the
information submitted through the Affidavit and issue a
letter approving or declining to approve the proposed
appointment.
Directors shall undertake to keep the licensed banks fully
informed, as soon as possible, of all subsequent events
relevant to the information provided in the Affidavit which
may have an impact on the assessment of fitness and
propriety.
3.4 The Company Secretary of the licensed bank shall notify
the Director of Bank Supervision of all subsequent eventsAssessment of
Fitness and
Propriety2.4
2.5
3.1
3.2
J.J


\{ December 2019MONETARY BOARI)
CENTRAL BANK OF SRI LANKA
BANKING ACT DIRECTIONS No.08 of20l9
Re-assessments
Date of
Implementation
Revocation of
Circulars4.2as informed by the Directors under Direction 3.3 above
within 15 days of becoming aware of such facts.
4.1 Continuing Directors shall submit the Affidavit annually,
15 working days before the Annual General Meeting of the
respective licensed bank or by 31't March of each year,
whichever is earlier.
Fitness and propriety of Directors willbe carried out at any
time where there are supervisory concerns in respect of any
Director as may be determined by the Director of Bank
Supervision.
This Direction shall come into effect commencing 01
January 2020.
The following Circulars issued by the Director of Bank
Supervision are hereby revoked.
(i) Circular No.02l04/002100121002 dated 3l March
2005 on Appointment of Directors of Banks (Section
42 of the Banking Act, No. 30 of 1988 as amended)
(ii) Circular No.02l04/00121002 dated i2 April 2005 on
Appointment of Directors of Banks
(iii) Circular No.021171600/0017/001 dated 27 August
2010 on Appointment of Directors
ft^-l^l*1
Dr. Indrajit Coomaraswamy
Chairman of the Monetary Board and
Governor of the Central Bank of Sri Lanka5.1
6.1


1
 Schedule 1
Assessing Fitness and Propriety of Directors  of Licensed Banks

 AFFIDAVIT

Section  1:  Information to be submit ted in terms of Section s 42 and 76H  of the Banking Act,
No. 30 of 1988 (As amended)

Name of the Bank:
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 affirm /make  oath and state
(please specify  as appropriate )] as follows:
(1) I am the [affirmant / deponent] above named and I have been appointed/ elected / nominated or
proposed to be appointed/ elected /nominated as ………….. …………………………………...
(designation ) of  ………………………………… …..… (name of bank ) which is a licensed
commercial bank/licensed special ised bank under the Banking Act  No. 30 of 1988.
(2) I state that my perso nal details are as follows:
2.1 (i)  Name with Initials:
(ii) Title: Mr/Mrs/Ms/Dr/Prof/Other (Please
specify ) (iii) Age  as at date of signing the
affidavit: days/months/years
 (iv) Date of Birth:  dd/mm/yyyy  (v) Gender:
(vi) Civil Status:  (vii) Nationality : (viii) Citizenship2:
(ix) Local/expatriate:

1 Not applicable for expatriate s
2 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)


2
 2.2 Contact
Details   Permanent Address :
Residential Address :
(i) Telephone  Mobile
Fixed line
Fax
(ii) E-mail Personal
Official
2.3 Occupation  or Profession :
2.4 (i) Appointed , Elected or Nominated
Post/ Designation  in the bank : (ii) Date of appointment  to the
Post/Designation  (dd/mm/yyyy )
2.5 (i) Nature of the appointment (Please mark X in relevant box(es) :
 Independent3  Executive   Alternate
 Non-Independent   Non-
Executive   Ex-officio
 Working Director   Senior
Director   Other  (Please
Specify)
 (ii) If non -independent, reasons for determining as non-independent :
 (iii)If nominated by major shareholder/s, name/s of such nominating shareholder/s:
 (iv) If an Alternate, name of the Principal Director:
2.6
 2.6.1 Details of close relations in terms of Section 86 of the Banking Act
(i) Full name of the Spouse:
(ii) NIC No1: (iii) Passport No :
2.6.2 Details of dependent children
(i) Full Name  (ii) NIC No1: (iii) Passport  No:

(3) I state that I possess the following academic and/or professional qualification/s:
In this regard, licensed banks are required to maintain  documentary evidence and shall submit such
evidence as and when required by the Director of Bank Supervision.

3 In terms of Direction 3(2)(iv) of the Banking Act Direction No. 11 & 12 on Corporate Governance
4 (i) Banking/Finance     (vii)       Strategic Planning
  (ii) Business /Administration    (viii)  Risk Management
  (iii) Economics      (ix) Human Resource Management
  (iv) Accounting /Auditing / Financial Analysis      (x)  Law and Regulation
  (v) Investment Management / Capital Markets    (xi)  Marketing
  (vi) Information Technology    (xii) Specific Qualifications according to the Mandate of the bank
  Qualifications (Academic)  Relevant
discipline4 Country  Name of the
Institution  Year of
completion
(i)
(ii)


discipline4 Country  Name of the
Institution  Year of
completion
(i)
(ii)
Qualifications  (Professional)
(i)


3

(4) I state that the effective experience that I possess in banking, finance, business or administration
or of any other relevant discipline4 is as follows:
In this regard,  licensed  banks are required to maintain  documentary evidence and shall submit such
evidence as and when required by the Director of Bank Supervision.
(5) In addition to the above information , I state that I possess the following additional qualifications:

5 In terms of the Sri Lanka Accounting & Auditing Standards Act No.15 of 1995  Current Positions  Name of the
Institution/
own business  Designation
/Position  Nature of
Appointm
ent (as per
item 2.5 as
applicable ) Work
Specializati
on Date of
Appoin
tment
(dd/mm/
yyyy ) Service
period
(dd/mm/
yyyy to
dd/mm/y
yyy)
Directorships
(i) Specified
Business
Entities5
(ii) Other
Other Positions

Previous Positions
Directorships
(i) Specified
Business
Entities5
(ii) Other
Other Positions

Special Assignments /
Consultancy  Name of the Institution  Description  Service Period
(dd/mm/yyyy to
dd/mm/yyyy )
(i)
(ii)
Outstanding Contributions (Publications, Seminars Conducted, Research etc.)

Topic of the Research/publication  Institute/Place  Year


4
 (6) I state that I hold/do not hold shares in licensed banks & their related companies (Subsidiaries6,
Associate s7 and Other  Companies8), finance companies, leasing companies and primary dealers
registered with/licensed by the Centr al Bank of Sri Lanka.

(7) Business Transactions
7.1. I state that I have/do not have deposits with the bank, its subsidiaries or associate
companies.  (If yes, please state name of the institution/s).
7.2. I state that I currently have /had the following business transactions  during the two years
immediately preceding the appointment , with the licensed  banks  & their related companies
(Subsidiaries , Associate s and Other Companies) , other related parties9 of the licensed bank,
finance companies,  leasing companies and primary dealers registered with/ licensed  by the
Central Bank of Sri Lanka .

6 ‘Subsidiary’ as defined by Section 17(3) of the Banking Act
7 ‘Associate Co mpany’ as defined by Section 46(1) of the Banking Act
8 Holds a substantial interest in terms of Section 86 of the Banking Act.
9 ‘Related parties’ as defined by Section 3(7)(i) of the Banking Act Direction No s.11 and 12 of 2007 on Corporate
Governance for  Licensed Banks in Sri Lanka.
10 Investments in Debt Instruments  Name of the
Institution /s Voting/Non -voting  No. of shares  Percentage holding
Direct  Indirect  Direct  Indirect

Name of the
Institution /s Date of
Transaction
(dd/mm/yy yy) Amount as at
dd/mm/yy yy
(Rs.mn)  Classification
(performing/
non-
performing)  Type and
Value of
Collateral
(Rs.mn)  % of
Bank’s
regulatory
Capital  Limit  Outstanding
Borrowings
(i)Current

(ii)Prior to
appointment

Investments10
(i)Current

(ii)Prior to
appointment


5
 (8) Appointments, Shareholdings and Business Transaction s of Close Relations
8.1. I state  the following details of my close relations presently employed as Directors, Chief
Executive  Officers  or Officers Performing Executive Functions of any licensed bank, its
related companies ( Subsidiaries, Associates , and Other Companies) , finance companies,
leasing companies and primary dealers registered with/licensed by the Central Bank of Sri
Lanka .
Name of the Close Relation  Name of the Institution  Position Held

8.2. I state the following details of direct or indirect share ownership in the licensed bank,  its
related companies ( Subsidiaries,  Associates,  and Other Companies) , finance companies,
leasing companies & primary dealers registered with/licensed by the Central Bank of Sri
Lanka, if any, presently held by any close relation.

8.3. I state that the close relation of mine currently has/had the following business transactions
with licensed banks, its related companies ( Subsidiaries , Associate s and Other Companies),
finance companies, leasing companies and primary dealers registered with/licensed by the
Central Bank of Sri Lanka, during the two years immediately preceding my appointment .

(9) 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 abroad, to the effect that I have committed or have been c onnected with the
commission of  any act which involves fraud, deceit, dishonesty or any other improper
conduct.  Name of the
Close Relation  Name of the
Institution  No. of Shares  Percentage of Holding
Direct  Indirect  Direct  Indirect

Name of
the Close
Relation  Name
of the
Instituti
on Date of
Transaction
(dd/mm/y y
yy) Amount as at
dd/mm/yy yy
(Rs.mn)  Type and
value of
collateral
(Rs mn)  % of Bank’s
regulatory
capital


dd/mm/yy yy
(Rs.mn)  Type and
value of
collateral
(Rs mn)  % of Bank’s
regulatory
capital
Limit  Outstanding

Borrowings

Investments10


6
 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

JUSTICE OF THE PEACE  /
COMMISSIONER FOR
OATHS
 (10) I state that I am subject to/ not subject to an investigation or inquiry consequent upon being
served with notice of a charge involving fraud, deceit, dishonesty or other similar criminal
activity, by any regulatory authority, supervisory authority, professional association,
Commission  of Inquiry, tribunal or other body established by law, in Sri Lanka or abroad.
(11) I state that I have been convicted / not been convicted by any Court in Sri Lanka or abroad in
respect of a crime committed in connection with financial management or of any of fence
involving moral turpitude.
(12) I state that I am /am not an undischarged insolvent and have been /not been  declared a bankrupt
in Sri Lanka or abroad.
(13) I state that I have failed/ not failed, to satisfy any judgment or order of any Court whether in
Sri Lank a or abroad, or to repay a debt.
(14) I state that I have been/ not been declared by a Court of competent jurisdiction in Sri Lanka or
abroad, to be of unsound mind.
(15) I state that I have been/  not been removed or suspended by an order of a regulatory or
supervi sory authority from serving as a Director/ Chief Executive Officer /Officer Performing
Executive Function s or any other officer  in a licensed bank or any other financial institution
or corporate body, in Sri Lanka or abroad.
(16) 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


(ii) Which has been wound up or is being wound up, or which is being compulsorily
liquidated; whether in Sri Lanka or abroad.
(17) I state that I am aware of the provisions of the Banking Act on assessment of fitness and
propriety of my position and confirm that the above information is to the best of my
knowledge and belief tru e and complete . I undertake to keep the bank fully informed, as soon
as possible, of all subsequent events, which are relevant to the information provided above.
(18) I state that I am not prevented by any written law from being appointed to the above post.
(19) I state that to the best of my knowledge I am a fit and proper person to be appointed, nominated
or elected as …………....………… ………………………….( designation) of a licensed
commercial bank/licensed specialised bank in terms of the provisions of the Banking Act.

 Affix Stamps
as applicable  ……………........


7
 Section 2 : To be filled by the Company Secretary
1. Corporate Information

2. Remarks of the Board of Directors
(1) Any other explanation  / information regard ing 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 appointment , nomination or election/proposed appointment, nomination or
election at the meeting dated…………( dd/mm/yyyy )

Name:

Signature of the Company Secretary and
the official stamp
Date:

 Recommendation of the Nomination Committee/Appo inting Authority for
Directors
Assessment Criteria
(Please specify the specific
knowledge/skills considered by the
Nomination Committee / Appointing
Authority)
Recommendation
(Please attach minutes of the
resolution/decision of the Nomination
Committee/Appointing Authority)


1
 Guidance to Duly Complete the Affidavit
to be submitted by the Directors 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 Directors of licensed banks in Sri Lanka.
1. Purpose of Obtaining the Affidavit

(i) The purpose of obtaining Affidavit s of Directors of Licensed Banks (LBs) is to enable the
Bank Supervi sion Department to assess the ir fitness and propriety in terms of the provisions
of the Banking Act. Accordingly, the Bank Supervision Department requires
comprehensive information to evaluate the qualifications, experience,  integrity and
compliance with o ther requirements specified in the Banking Act, to assess the suitability
of the Directors.  This Affidavit shall  be the legally binding document in the event of any
dispute.

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 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/object s 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.
(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.
(v) If the person is a foreigner and signs the Affidavit while overseas:


amendments.
(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.


2
 • Attestation should be made in front of the diplomatic or 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) Attest by a Commissioner for Oaths/Justice of the Peace immediately after the signature of
the person at ‘Before me’ .
(viii) Section 2 should be filled by the Company Secretary a nnexing  a copy of the minutes of the
Nominations Committee  or Approving Authority  pertaining to the relevant appointment.
(ix) In item  2(1) of Section s 2 if there is no comment , it should be stated as Not
Applicable/ Nil/None.


MONETARY BOARI)
CENTRAL BANK OF SRI LANKA
BANKING ACT DIRECTIONS q December 201.9 No.09 of 2019
AMENDMENT TO THE BANKING ACT DIRECTIONS
Nos. 11 AND 12 OF 2007 ON CORPORATE GOVERNANCE FOR
LICENSED BANKS IN SRI LANKA
Banking Act Directions Nos. 11 and 12 of 2007 on Corporate Governance for Licensed
Commercial Banks and Licensed Specialised Banks in Sri Lanka dated 26 December 2007 are
hereby amended by inserting the following new Direction. Licensed Commercial Banks and
Licensed Specialised Banks shall hereinafter be referred to as licensed banks.
3(3) (iii) A Director or a Chief Executive Officer of a licensed bank operating in Sri Lanka shall
not be appointed as a Director or a Chief Executive Officer of another licensed bank
operating in Sri Lanka before the expiry of a period of 6 months from the date of
cessation of his/her office at the licensed bank in Sri Lanka. Any variation thereto in
exceptional situations such as where expertise of retiringbankers maybe required when
reconstituting Boards of licensed banks which need restructuring, shall be subject to
the prior approval of the Monetary Board. In this regard,licensed banks shall ensure to
adhere to the requirement of the cooling-off period when appointing Directors or Chief
Executive Officer. If a Director is appointed to the licensed bank by an appointing
authority violating these Directions, the licensed bank shall take steps to prevent such
appointee from exercising any powers or enjoying any privileges or benefits.
f[,sl"*--
Dr. Indrajit Coomaraswamy
Chairman of the Monetary Board and
Governor of the Central Bank of Sri Lanka


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT17 April 2019BANKING ACT DIRECTIONNo. 01 of 2019MEASURES TO CURTAIL IMPORTS OF MOTOR VEHICLES ANDNON-ESSENTIAL CONSUMER GOODSNational Savings Bank is hereby informed that the Banking Act Directions No.7 of 2018 dated 12 October 2018 on Measures to Curtail Imports of Motor Vehicles and Non- Essential Consumer Goods are withdrawn with effect from the date of this Direction.H A KarunaratneActing Senior Deputy Governor/Chief Executive Officer of the Central Bank of Sri Lanka


g @os» ©co^|6Dlhl65)S LD^^Im 6U15hS0CENTRAL BANK OF SRI LANKA©so^ Ep3cs©d3 eurhjafl Gmfbun'rr^&u^ ^sD6wa&6iTLb Bank Supervision DepartmentApril 2019To - Chief Executive Officers of all Licensed BanksDear Sir/ Madam,Reference Rates applicable for Maximum Interest Rates on Sri Lanka Rupee Deposits of Licensed Banks for Quarter ending 30 June 2019With reference to the Monetary Law Act Order No. 01 of 2019 on the ‘Maximum Interest Rates on Sri Lanka Rupee Deposits of Licensed Banks’, the Standard Deposit Facility Rate (SDFR) as at the end of the first quarter of 2019 and, the simple average of the Weighted Average Yield Rates (WAYR) relating to the last 04 primary auctions for 364-days Treasury Bills conducted during the first quarter of 2019 are in Table 01 below.Table 01: Applicable Reference Rates for Quarter ending 30 June 2019Rate%SDFR8.00WAYR of 364-days Treasury Bills10.54You^ f^thfullyA M ThassimDirector of Bank Supervision
6 Sto@, epoca 30, da»3©© ©JSCD, ocwg® 01, 6^LD 30 Qan\ipibn 1 Level 6, No. 30, Janadhipathi Mawatha, Colombo 1coo. o©. 590, scale® 01, § ©oon© Qu. ®60.590, Qarr(ipihL| 01, gsDibiao® P. 0. Box. 590, Colombo 01, Sri Lanka.


§ ©29^6015163)® LD^lLl GUfbiafilCENTRAL BANK OF SRI LANKA©SOQ SDIHJ^ GiErbuntTSinsu^ ^emewiasuLb Bank Supervision Department28 June 2019To - Chief Executive Officers of all Licensed BanksDear Sir/ Madam,Reference Rates applicable for Maximum Interest Rates on Sri Lanka Rupee Deposits of Licensed Banks for Quarter commencing 01 July 2019With reference to the Monetary Law Act Order No. 01 of 2019 on the "Maximum Interest Rates on Sri Lanka Rupee Deposits of Licensed Banks’, the Standard Deposit Facility Rate (SDFR) as at the end of the second quarter of 2019 and, the simple average of the Weighted Average Yield Rates (WAYR) relating to the last 04 accepted primary auctions for 364-days Treasury Bills conducted during the second quarter of 2019 are in Table 01 below.Table 01: Applicable Reference Rates for Quarter commencing 01 July 2019Rate%SDFR7.50WAYR of 364-days Treasury Bills8.83Yours faithfullyJ P GamalathActing Director of Bank Supervision
6 Sen epota 30, danSoS ®J£)CD, ©tajg® 01, 6 ^tb icrri^, @60. 30 ^anrra^ug? icrrsu^eiD^ Qairftpibiq 1 Level 6, No. 30, Janadhipathi Mawatha, Colombo 1os. ©o. 590, ©caj©® 01, ©otaaO 5. Qu. @6V. 590, Qanxjptbq 01, ©sorasDa P. 0. Box. 590, Colombo 01, Sri Lanka.


CENTRAL BANK OF SRI LANKA
BANIK SUPERVISION DEPARTMENT
0[ January 2019 CIRCULAR No.01 of 2019
Guidelines for the Employment of Expatriate Officers in
Licensed Banks in Sri Lanka
Licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed
banks) shall adhere to the following guidelines for the employrnent of suitable and eligible
expatriate officers based on the needs of licensed banks.
1 General 1.1
RequirementsExpatriate officers, who are appointed as Chief Executive
Officers (CEOs) or such other officers performing executive
functions in licensed banks, are subject to the fitness and
propriety assessment in terms of Section 44A or Section 76H of
the Banking Act, No. 30 of 1988, as amended, in addition to
these Guidelines.
Licensed banks shall give priority to local officers and
employment of expatriate officers shall be considered after all
reasonable means have been taken to attract and employ local
officers. Local offrcers shall mean Sri Lankan citizens for the
purpose of these Guidelines.
Licensed banks shall establish succession planning to identify
local staff and train such staff to take up the
positions/responsibilities held by expatriate officers within a
reasonable period.
Nevertheless, Guidelines 1.2 and 1.3 above will not be
applicable in the case of a bank incorporated outside Sri Lanka,
which is within the permitted limit as specified in Guideline 4.1.
The Central Bank of Sri Lanka (CBSL) may withdraw an
approval granted for employment of an expatriate officer at any
time deemed necessary and shall communicate such decision to
the relevant licensed bank giving a maximum of four months oft.2
1.3
t.4
1.5


ffi
CENTRAL BANK OT'SRI LAIIKA
BANK SUPERVISION DEPARTMENT
of January2019 CIRCULAR No.01 of2019
2 Expatriate
Officersnotice.
2.1 Expatriate officers for the purpose of this Direction shall be:
(i) permanent or contract employees who are on the
payroll of the licensed bank or on the payroll of the
parent bank ofbanks incorporated outside Sri Lanka,
and is not limited to CEOs and such other officers
performing executive functions; and
(ii) consultants/advisors to the Board of Directors or
bank.
3.1 Approval for expatriate officers will be granted on a case-by-
case basis taking into consideration the specific needs/projects
of licensed banks.
3.2 Approval will be granted for the employment of expatriate
officers in the following fields.
(i) Implementation of the Basel regulatory framework
(ii) InternationalFinancialReportingStandards
(iii) Risk modeling
(iv) Data warehousing and information technology risk
management
(v) Structuring of derivative products
(vi) Corporate govemance
(vii) Any other area where a skills gap exists in Sri Lanka,
as determined by CBSL
Validity period of the approval shall be on a case-by-case basis
up to a maximum of 3 years.
Licensed banks shall submit projections on specific business or
deliverables expected from expatriate officers along with other
details as in Part I of Annex I.
Extension oftenure approved under 3.3 aboveEligibility
Criteria for Banks
lncorporated
Locally
J.J
3.4
3.5


ffi
of January 2019CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT
CIRCULAR No.01 of2019
Eligibility
Criteria for Banks
Incorporated
Outside Sri Lanka4.1(D The extension of the term of expatriate officers will be
considered on a case-by-case basis based on:
(a) necessity of the extension of the project;
(b) annual performance reviews of expatriate officers; and
(c) the succession planning followed by the licensed
bank.
(iD Maximum extension period shall be I year.
The maximum number of expatriate officers permitted shall be
based on the number of permanent local staff employed by the
licensed bank as follows:
Permanent local staff Permitted number of
expatriates
Less than 75 J
75 to 400 5
More than 400 10
Licensed banks shall submit the details of expatriate offrcers to
CBSL as attached in Part I of Annex I.
Validity period of permission shall be up to a maximum of 4
years for CEOs and 3 years for other expatriate officers.
Extension of tenure permitted under 4.3 above
(i) Extension of tenure will be approved based on
recommendation of the regional office.
(ii) Maximum extension period shall be 2 years for CEOs and
1 year for other expatriate officers.
(i) Under exceptional circumstances, approvals for
appointment of expatriate officers in excess of the
maximum number of expatriate officers permiued in 4.1
above may be considered on a case-by-case basis for a4.2
4.3
4.4
4.5


+
CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENTI
No.01 of2019
lssuance of Visa
Recommendation
Lettersperiod up to 1 year. However, in order to consider such
request at least 80% of the officers performing executive
functions of the licensed bank should be local permanent
staff.
(ii) For this pulpose, licensed banks shall submit specific skills
of the nominated expatriate officers and specific
responsibilities/projects assigned to himlher along with
other details as in Part I of Annex I.
(iii) The extension of the term of such appointed expatriate
officers will be considered on a case-by-case basis based
on:
(a) necessity ofthe extension ofthe project;
(b) annual performance reviews of expatriate officers; and
(c) the succession planning followed by the licensed bank.
(iv) Maximum extension period on such appointments will be 2
years.
4.6 For new branches of banks incorporated outside Sri Lanka,
approval for employment of expatriate officers exceeding the
permitted number specified in Guideline 4.1 will be granted on a
case-by-case basis taking into consideration the specific needs of
the bank.
5.1 The issuance of visa recommendation letters by the Director of
Bank Supervision will be limited to:
(i) expatriate officers on the payroll of licensed bank or on
the payroll of the parent bank of banks incorporated
outside Sri Lanka, and permitted/approved in terms of
these guidelines:
(a) the chief executive officer or officers performing
executive functions; and


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT
6ll- Janua 2019
6 Revocation5.2
5.3CIRCULAR No.01 of 2019
(b) any other officers.
(iD close relations as defined in the Banking Act (spouse and
dependent children) and dependent parents of expatriate
officers;
(iiD an expatriate director of a licensed bank; and
(iv) consultants/advisors to the Board of Directors or bank
permitted/approved in terms of these guidelines.
A11 applicants recorlmended for visa by the Director of Bank
Supervision shall conduct themselves in a responsible manner
during their stay in Sri Lanka.
The Board of Directors or CEOs of banks incorporated locally
and, executive at head office/regional head office who is
responsible for the operations in Sri Lanka of banks
incorporated outside Sri Lanka are responsible to inform the
Director of Bank Supervision of any improper conduct and
other concerns relating to the expatriate officer's stay in Sri
Lanka.
Licensed banks shall submit visa recommendation request
forms as given in Part II of Annex I.
6.1 The Circular Ref. No. 02101/00/0002/001 dated 31 December
2007 on Guidelines for Employment of Expatriate Staff in
Banks is hereby revoked.
A A M Thassim
Director of Bank Supervision5.4


Annex I
Part I: Application Form for Appointment of an Expatriate Officer
1Name of the bank
2.Name of the expatriate officer
3.Current designation of the expatriate officer in the parent bank (if
applicable)
4.Designation to be filled in Sri Lanka
5.Responsibilities/proj ects assigned to the expatriate offi cer
6.Duration of the posting/contract/project
7.Projections for specific business/expected deliverables from the
expatriate officer (including Key Performance Indicators (KPI) and
target dates for each KPI)
8.Any other information relevant to the appointment (e.g. succession
plan)
Attachments to be submitted:
1. Curriculum Vitae of the expatriate officer
2. Certification on accuracy of details*
Attachments to be submitted:
1. Certified copy of the passport
2. Certification on accuracy of details*
Declaration:
I confirm that the above information is true and complete to the best of my knowledge
and belief.
Date: Signature:
*'CEO shall certifu the accuracy of details submitted on expatriate fficers. Details with respect to
CEO, his/her spouse, dependent children and dependent parents shall be certified by the
Company Secretary in case of a bank incorporated locally and by the executive at head
ffice/regional head ffice who is responsible for the operations in Sri Lanka in the case of a bank
incorporated outside Sri Lonka. Such certification can also be included in the covering letter.Part II: Visa Recommendation Request Form
Oo be filled for each person requesting visa recommendation)
IName in full
2.Relationship to the expatriate officer
3.Date of birth
4.Nationality
5.Gender
6.Civil status
7.Category of visa
8.Reasons for applying for visa
9.Passport details (passport number, date of issue, date of expiry)
10.Any other relevant information


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT12 March 2019 CIRCULAR No. 03 of 2019MARGIN REQUIREMENTS AGAINSTIMPORTS ON DOCUMENTS AGAINST ACCEPTANCE (DA) TERMSAll licensed banks are hereby informed that the Circular No 2 of 2018 dated 11 October 2018 on Margin Requirements Against Imports on Documents Against Acceptance (DA) Terms is withdrawn with effect from 13 March 2019.J P GamalathActg. Director of Bank Supervision


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT 13 March 2019 CIRCULAR No. 04 of 2019NON-INTEREST BASED INCENTIVE SCHEMES FOR INTEREST BEARING SAVINGS AND TIME DEPOSITS OF LICENSED BANKS1Objective1.1The Central Bank of Sri Lanka is of the view that offering non-interest
2Incentive2.1based incentive schemes for mobilising of interest bearing savings and time deposits create undue competition among licensed banks while undermining the interest rate policies implemented by the Central Bank of Sri Lanka. Accordingly, licensed banks are informed to adhere to the following with immediate effect in order to promote market determined interest rates and fair competition to safeguard the interests of the depositors.Licensed banks shall not conduct:
3schemes not permittedPermitted3.1(i) lottery schemes/raffle draws.(ii) gift schemes, etc.that result in a disadvantageous situation for the customers where features of a financial product/service are distorted, e.g., relatively reduced interest rates on savings deposits, incorporating features of time deposits to savings accounts.Licensed banks may conduct gift schemes (seasonal/promotional)gift schemesprovided that:(i) all customers of the relevant product, service or category of the product/service receive the offered gift,(ii) applicable market interest rates are offered based on the nature of the product,(iii) cost of the gifts is not charged to customers, and(iv) no additional terms and conditions are imposed on customers with respect to the gifts offered.J P GamalathActing Director of Bank Supervision


CENTRAL BANK OF SRI LANKABANK SUPERVISION DEPARTMENT26 April 2019 CIRCULAR No. 06 of 2019SUPPLEMENT TO CIRCULAR NO. 04 OF 2018 ON THEADOPTION OF SRI LANKA ACCOUNTING STANDARD - SLFRS 9: FINANCIAL INSTRUMENTS IN LICENSED BANKS1. On 31 December 2018, the Central Bank of Sri Lanka (CBSL) issued Guidelines to licensed banks on SLFRS 9 to be adopted within the requirements of SLFRS 9, promoting consistent and prudent application of same in the banking sector.2. The Monetary Board, considering the representations made by licensed banks and the Report of the Working Group on high market interest rates and issues faced by Small and Medium Enterprises (SMEs) has decided that licensed banks may adopt the following as an interim measure in respect of the adoption of SLFRS 9 during a transitional period with the approval of their Board of Directors.(i) With reference to the requirements set out in Section 1.2 of Annex I to the Guidelines to Licensed Banks on the Adoption of Sri Lanka Accounting Standard - SLFRS 9: Financial Instruments issued by CBSL on 31.12.2018, licensed banks may rebut the 30-day rebuttable presumption on significant increase of credit risk to 60 days subject to internally approved procedures laid down by the Board of Directors, for a temporary period between 01.01.2019 to 30.06.2020 with respect to credit facilities granted to SMEs up to an aggregate loan limit of Rs. 25 million per SME.(ii) With reference to Sections 1.2(b) and 1.3(b) of the Annex I of the above Circular, licensed banks may exempt credit facilities granted to SMEs up to an aggregate loan limit of Rs. 25 million per SME, which are subsequently restructured between 01.01.2019 to 30.06.2020.(iii) Further, it is reiterated that in terms of the above guidelines a credit facility shall be considered as restructured only if, original repayment terms have been amended due to a deterioration in credit quality, while the respective credit facility remained as performing in terms of CBSL Directions


quality, while the respective credit facility remained as performing in terms of CBSL Directions (including Temporary Overdrafts). An extension of the facility is possible without having to incur an impairment charge if there was an underlying business case and there was no significant increase in credit risk. The internal policies of the bank approved by its1


CENTRAL BANK OF SRI LANKABANK SUPERVISION DEPARTMENT2k April 2019 CIRCULAR No. 06 of 2019Board of Directors should set out the factors to be considered in assessing the credit risk when the original repayment terms are changed or extended.(iv) During the interim period up to, 30.06.2020, licensed banks may take steps to analyse and back test their portfolios of advances to the SME sector and develop models to compute the expected loss provisions for this segment or any sub segment thereof.(v) Further, in lieu of Temporary Overdrafts, the licensed banks may devise products to facilitate short-term revolving funding to SMEs assessing the risk and pricing of such products at reasonable rates.u.Director of Bank Supervision
2


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT08 May 2019 CIRCULAR No. 07 of 2019CONCESSIONS GRANTED TO TOURISM INDUSTRYIn view of the adverse impact on tourism industry due to the current situation of the country, licensed commercial banks and licensed specialised banks, hereinafter referred to as licensed banks, are requested to grant the following concessions to those individuals and entities in the tourism industry, who wish to avail such concessions.(i) Licensed banks may grant a moratorium to individuals and entities who have registered with Sri Lanka Tourism Development Authority or any other authority/ agency to provide services to tourism, on a case-by-case basis.(ii) The moratorium shall be granted for performing loans (both capital and interest) till 31 March 2020, in respect of outstanding credit facilities as at 18 April 2019.(iii) The Board of Directors of the licensed bank or any other authority delegated by the Board of Directors shall approve the granting of moratorium.(iv) Licensed banks shall convert the capital and interest falling due during the moratorium period into a term loan which shall be recovered from July 2020 onwards. A concessionary rate of interest may be charged for this facility.(v) The licensed bank and the borrower shall agree on the repayment period and the rate of interest on the above loans.(vi) Licensed banks may maintain non-performing loans in the same category for classification and provisioning purpose, during the moratorium period.(vii) Licensed banks shall waive off the penal interest to be charged on non- performing loans, during the moratorium period.(viii) Licensed banks shall use the funds in Enterprise Sri Lanka Loan Scheme (Jaya Isuru) and Sawbagya Loan Scheme of the Central Bank of Sri Lanka to grant working capital facilities, if necessary, after taking into account the moratorium granted for capital and interest dues.


08 May 2019CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENTCIRCULARNo. 07 of 2019(ix) Licensed banks shall maintain necessary documents to substantiate the granting of such concessions.(x) Licensed banks shall report the moratorium availed by borrowers as per the format in Annex I, to the Director of Bank Supervision on a monthly basis by 15th of the succeeding month. ~A A M ThassimDirector of Bank Supervision


Annex 1Circular No. 07 of 2019Details of Borrowers Availing Concessions Granted to Tourism IndustryName of the Bank:..................................................................................................................................... as at end of......................
Please email to bsddb@cbsl.lk with a copy to dbsd@cbsl.lk by 15th of the subsequent month.Serial No.Name of the BorrowerAmount OutstandingRs. ‘000 (as at 18.04.2019)Amount Considered for Moratorium Rs. ‘000Loan Classification (performing/ NPL category)New loan for dues during moratoriumSource of funds for the new loan (Jaya Isuru/ Sawbagya)Repayment PeriodInterest Rate


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT18 November 2019 CIRCULAR No. 08 of 2019LIST OF QUALIFIED AUDITORS TO AUDIT THE ACCOUNTS OF LICENSED COMMERCIAL BANKS AND LICENSED SPECIALISED BANKSIn terms of the Sections 38A and 76H of the Banking Act, No. 30 of 1988, as amended, the Central Bank of Sri Lanka (CBSL), has reviewed the list of qualified auditors to conduct audits of licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks) in Sri Lanka.1. Evaluation1.1 The Director of Bank Supervision with the approval of the MonetaryProcessBoard has selected qualified auditors to audit the accounts of licensed banks in Sri Lanka in accordance with the updated guidelines issued by the Monetary Board in this regard.1.2 The assessment criteria considered under the updated guidelines include number and qualifications of audit partners, staff strength and qualifi-cations, experience and expertise of the audit firm and availability of technical competencies including expertise on banking regulation & financial products, ability to undertake forensic audits and capabilities & experience on Information Technology audits.2. List of2.1 Accordingly, CBSL has selected the following Qualified Auditors toQualifiedaudit the accounts of licensed banks in Sri Lanka from financial yearsAuditorscommencing 01.01.2021:(i) BDO Partners“Charter House”, No. 65/2, Sir Chittampalam A Gardiner Mawatha, Colombo 02(ii) Ernst & Young, Sri LankaNo. 201, De Saram Place, Colombo 10(iii) KPMG Sri LankaNo. 32A, Sir Mohamed Macan Markar Mawatha, Colombo 03(iv) PricewaterhouseCoopersNo. 100, Braybrooke Place, Colombo 02(v) SJMS AssociatesNo. 11, Castle Lane, Colombo 04


18 November 20193. Revocationof PreviousCircularsCENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENTCIRCULARNo. 08 of 20193.1 The circulars dated 30 April 1998 on the List of Qualified Auditors issued to licensed banks will cease to be effective from financial yearscommencing 01.01.2021.Director of Bank Supervision


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT18 April 2019 CIRCULAR No. 05 of 2019REMOVAL OF RESTRICTIONS ONOPENING OF LETTERS OF CREDIT (LCs) FOR IMPORTATION OF MOTOR VEHICLES UNDER PERMITS ON CONCESSIONARY TERMS1. Licensed commercial banks and licensed specialised banks are informed of the removal of restrictions on the opening of LCs for importation of motor vehicles under the permits on concessionary terms as follows:(a) Permits issued for importation of motor vehicles in terms of P.A. Circular No. 22/99, LCs may be opened on or after:(i) 01.05.2019 for permits issued on or before 31.12.2018;(ii) 01.06.2019 for permits issued in any date.(b) Permits issued for importation/ purchase of motor vehicles in terms of Trade and Investment Policy Circular No. 01/2018 and subsequent amendments and officers appointed to Sri Lanka Mission/ Posts abroad, LCs may be opened on or after: (i) 01.06.2019 for permits issued on or before 30.09.2018;(ii) 01.07.2019 for permits issued on or before 30.11.2018;(iii) 01.08.2019 for permits issued on or before 28.02.2019;(iv) 01.09.2019 for permits issued on or before 30.06.2019;(v) 01.10.2019 for permits issued in any date.2. Direction No. 2 of the Banking Act Directions No. 06 of 2018 dated 28.09.2018 on Measures to Curtail imports of Motor Vehicles is withdrawn by Banking Act Direction No. 02 of 2019 dated 18 April 2019.J P GamalathActg. Director of Bank Supervision


Explanatory Note No. 01 of 2019Bank Supervision Department 16 May 2019INTERPRETATIONS FOR CIRCULAR NO. 07 OF 2019 ON CONCESSIONS GRANTED TO TOURISM INDUSTRYThe following interpretations are issued in relation the Circular No. 07 of 2019 dated 08 May 2019 on Concessions Granted to Tourism Industry.1. IndividualsIndividuals include persons providing services to tourism sector and permanent employees of entities who provide services to tourism sector.2. Registration(i) Persons and entities providing services to tourism sector shall be registered with any of the following Institutions, as at 18.04.2019.(a) Sri Lanka Tourism Development Authority(b) Agencies under Sri Lanka Tourism Development Authorityi) Sri Lanka Tourism Promotion Bureauii) Sri Lanka Tourism Convention Bureauiii) Sri Lanka Institute of Tourism and Hotel Management(c) The Hotels Association of Sri Lanka(ii) Persons and entities who have not registered with any of the Institutions referred in 2(i) above as at 18.04.2019, shall have at least registered their businesses/ services with the local government authorities such as Pradeshya Sabha, Urban Council or Municipal Council as at 18.04.2019 and in order to avail the moratorium, such persons and entities shall now be required to register with the relevant institution/s referred in 2(i) above.3. Granting of moratorium(i) Individuals or entities who wish to avail the moratorium shall make a request to the relevant licensed bank seeking such moratorium.(ii) Licensed banks shall evaluate such request individually, including the requirement stipulated in para 2 above, in order to assess the eligibility.(iii) The moratorium shall be granted for any performing credit facilities (both capital and interest) as at 18.04.2019 of such individuals or entities.


(iv) Licensed banks shall report all individuals or entities who have requested to avail the moratorium, as per the reporting format prescribed in the Circular No. 07 of 2019 on Concessions Granted to Tourism Industry.4. Accounting Treatment under SLFRS 9(i) Licensed banks shall comply with the instructions provided by the Chartered Accountants of Sri Lanka in relation to recognitions of interest income and accounting for financial assets (Annex I).


CHARTERED13th May 2019Mr H A. KarunaratneDeputy GovernorCentral Bank of Sri Lanka.# 30. Janadhipathi Mawatha, Colombo 01Dear Mr KarunaratneRe: Concessions to the Tourism IndustryWe thank the Central Bank of Sri Lanka for referring to us the proposed concessions to the tourism industry announced by the government requesting to clarify the accounting treatment as per SLFRS 9 Financial InstrumentsAccordingly, with reference to your letter dated 07,n May 2019 under the above heading please find below the clarification you sought as per the recommendation made at the CA Sri Lanka Financial Reporting Standards Implementation & Interpretation Task Force meetingIssue 1: Recognition of interest income during the moratorium periodParagraph 5 4 1 of SLFRS 9Interest revenue shall be calculated by using the effective interest method This shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for(a) purchased or originated credit-impaired financial assets For those financial assets the entity shall apply the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition(b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets For those financial assets the entity shall apply the effective interest rate to the amortised cost of the financial asset in subsequent reporting periods.Paragraph 5 4 2 of SLFRS 9:An entity that m a reporting period, calculates interest revenue by applying the effective interest method to the amortised cost of a financial asset in accordance with paragraph 5 4 1(b) shall, in subsequent reporting periods calculate the interest revenue by applying the effective interest rate to the gross carrying amount if the credit risk on the financial instrument improves so that the financial asset is no longer credit-impaired and the improvement can be related


so that the financial asset is no longer credit-impaired and the improvement can be related objectively to an event occurring after the requirements in paragraph 5 4 1(b) were applied (such as an improvement in the borrower's credit rating)Accordingly interest income can be recognised by the banks by using the Effective Interest Rate (EIR) applied to the gross carrying amount or the net carrying amount considering the stage into which that loan belongs to at the time of the modification


Illi iHSinUIC DI CHARTEREDIssue 2: Consideration of the rescheduled loans (terms loans) under the same category for classification and provisioning purposesBased on the given information, banks are requested to convert the capital and interest falling due during the moratorium period into a loan Accordingly, there would be a modification of the financial assets where the banks would be required to re-estimate the cash flows attached to the financial assetsIn these circumstances the banks may need to assess whether the financial asset need to be derecognized under SLFRS 3.2.3(a) which states that an entity shall derecognize a financial asset when and only when: (a) the contractual rights to the cash flows from the financial asset expire On that basis de-recognition of a financial asset on the revised terms would occur where the moratorium results in substantial modification to the original cash flows which could be seen as an expiry of those cash flows.As per B5 5 25 of SLFRS 9 in some circumstances, the renegotiation or modification of the contractual cash flows of a financial asset can lead to the derecognition of the existing financial asset in accordance with this Standard When the modification of a financial asset results in the derecognition of the existing financial asset and the subsequent recognition of the modified financial asset, the modified asset is considered a 'new' financial asset for the purposes of this StandardAs per B5 5.26 Accordingly, the date of the modification shall be treated as the date of initial recognition of that financial asset when applying the impairment requirements to the modified financial asset This typically means measuring the loss allowance at an amount equal to 12-month expected credit losses until the requirements for the recognition of lifetime expected credit losses in paragraph 5 5 3 are met However in some circumstances following a modification that results in derecognition of the original financial asset, there may be


a modification that results in derecognition of the original financial asset, there may be evidence that the modified financial asset is credit-impaired at initial recognition, and thus, the financial asset should be recognised as an originated credit-impaired financial asset This might occur, for example in a situation in which there was a substantial modification of a distressed asset that resulted in the derecognition of the original financial asset In such a case, it may be possible for the modification to result in a new financial asset which is credit-impaired at initial recognitionAccordingly the holder of the financial asset should perform a quantitative and qualitative evaluation of whether the modification is substantialAs per SLFRS 9. para 5.4.3 when the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or modification does not result in the derecognition of that financial asset in accordance with this Standard, an entity shall recalculate the gross carrying amount of the financial asset and shall recognise a modification gain or loss in profit or loss. The gross carrying amount of the financial asset shall be recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial asset s original effective interest rateParagraph B5 5 26 of SLFRS 9Accordingly the date of the modification shall be treated as the date of initial recognition of that financial asset when applying the impairment requirements to the modified financial asset This typically means measuring the loss allowance at an amount equal to 12-month expected credit losses until the requirements for the recognition of lifetime expected credit losses in paragraph 5 5.3 are met.


Paragraph B5 5 27 of SLFRS 9If the contractual cash flows on a financial asset have been renegotiated or otherwise modified, but the financial asset is not derecognised, that financial asset is not automatically considered to have lower credit risk An entity shall assess whether there has been a significant increase in credit risk since initial recognition on the basis of all reasonable and supportable information that is available without undue cost or effort This includes historical and forward-looking information and an assessment of the credit risk over the expected life of the financial asset, which includes information about the circumstances that led to the modification Evidence that the criteria for the recognition of lifetime expected credit losses are no longer met may include a history of up-to-date and timely payment performance against the modified contractual terms Typically, a customer would need to demonstrate consistently good payment behaviour over a period of lime before the credit risk is considered to have decreasedAccordingly the modified loan referred to above in order to grant concessions to the tourism sector, should be classified in an appropriate stage considering the bank s assessment on whether there has been a significant increase in credit risk since initial recognition on the basis of all reasonable and supportable information at the time of modification and in subsequent reporting periods Otherwise, the modified loan result in the derecognition of the financial asset, guidance given in paragraph B5 5.25 and B 5 5.26 shall be appliedIssue 3: What should be the disclosure requirements in relation to the above?General disclosures in terms of SLFRS 7 Financial Instruments Disclosures need to be followed by the banks in the financial statements In addition to the general disclosures required, in relation to impairment requirements of financial assets which have had modifications to their contractual cash flows need to provide disclosures


assets which have had modifications to their contractual cash flows need to provide disclosures required by SLFRS 7 (35F(f)), (35l)(b) and (35J)This explanation is provided purely based on the limited facts and information provided by you and as such the Institute of Chartered Accountants of Sn Lanka takes no responsibility if the explanation would have been different had more information been available Further, the application of the Sri Lanka Accounting Standards requires exercise of judgement Therefore, the ultimate responsibility for the recognition, measurement, presentation and disclosures of any transaction rests with the preparers of the financial statements In providing this clarification, we have exercised due care and diligence and therefore we believe that the clarification given is appropriate. If you require further clarifications on the issue, we advise you to seek professional adviceThank youYours sincerelyTHE INSTITUTE OF CHARTERED ACCOUNTANTSOF SRI LANKAJagath Perera PRESIDENT


Explanatory Note No. 02 of 2019Bank Supervision Department20 June 2019INTERPRETATIONS FOR CIRCULAR NO. 07 OF 2019 ON CONCESSIONS GRANTED TO TOURISM INDUSTRYThe following interpretations are issued in relation the Circular No. 07 of 2019 dated 08 May 2019 on Concessions Granted to Tourism Industry.1. Registration(i) Persons and entities providing services to tourism sector and have not registered with any of the Institutions referred in Explanatory Note No. 01 of 2019, shall now be required to register with the Sri Lanka Tourism Development Authority, in order to avail the moratorium.2. Granting of moratorium(i) The moratorium shall be granted for any performing credit facilities (both capital and interest) as at 18.04.2019 of eligible individuals or entities (herein after referred to as eligible borrowers). However, if such eligible borrowers wish to avail the moratorium only for capital or interest, licensed bank may grant such moratorium for such eligible borrowers, as requested.(ii) Licensed banks may convert the capital or interest or both, as the case may be, falling due during the moratorium period into a new credit facility or extend the maturity of the original credit facility by the moratorium period with the consent of the eligible borrower.(iii) Licensed banks may grant the moratorium for a lesser period, if the eligible borrower wishes to avail the moratorium for a period less than the period stipulated in Circular No. 07 of 2019 dated 08 May 2019 on Concessions Granted to Tourism Industry. However, the repayment of capital, interest or both falling dues during the moratorium period shall commence after three months from the end of the applicable moratorium period.(iv) In the event, capital, interest or both falling due during the moratorium period are converted to a new facility, licensed banks may charge a concessionary rate of interest not exceeding the latest auction rate for 364-days Treasury Bill, at the end of the moratorium period, plus 1.00 per


latest auction rate for 364-days Treasury Bill, at the end of the moratorium period, plus 1.00 per cent per annum, for a repayment period not exceeding two years. The licensed bank and the borrower shall agree on the interest rate, if the repayment period exceeds two years.


(v) With regard to provision of working capital facilities, licensed banks shall comply with the Guidelines issued by the Department of Development Finance, Ministry of Finance.(vi) Licensed banks shall report the details of concessions granted to eligible borrowers on a cumulative basis for the week ending on each Friday by Wednesday of the following week, as per the revised format at Annex I.


Annex ICircular No 07 of 2019 on Concessions Granted to Tourism Industry Weekly Report on Borrowers Availing ConcessionsName of the bank Cumulative position for the week ending................ ............ -........... .Rs. 000Serial No.Details of Moratorium Granted _____________________Details of Working Capital FacilityRemarks Name of the borrowerRequest considered for granting of moratorium (Yes/No)Reasons for not considering the request for the moratoriumAmount outstanding as at 18.04.2019Amount Considered for moratoriumType of the moratoriumPeriod of the MoratoriumNew loan created for amount falling due during the moratorium periodStatus of the moratoriumAmount granted for working capitalApplicable interest rateRepayment periodInterest rate 1234567891011121314
Notes:Column 2 - Report the cumulative request received from borrowers to avail the concessionColumn 4 - Reasons for not considering the request made by the borrowerColumn 5 - Total exposure of the eligible borrower to tourism sectorColumn 6 - Outstanding balances of credit facilities that are considered for the moratoriumColumn 7 - Granted extension to original maturity of the facility (E), converted capital (C), interest (I) or both (Cl) to a new facilityColumn 8 - Report the moratorium periodColumn 10 - Report the applicable interest rate for the new facility or interest free facilityColumn 11 - Report whether moratorium has been granted or under approval processColumn 14 - Provide additional information, if anyPlease email to bsddb^cbsUk with a copy to dbsdgpcbsl.lk by Wednesday of the following week.


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT18 July 2019EXPLANATORY NOTENo. 03 of 2019Interpretations for Banking Act Directions No. 01 of 2016 on Capital Requirements under Basel III for Licensed Commercial Banks and Licensed Specialised BanksThe banking sector in Sri Lanka has adopted Sri Lanka Accounting Standard - SLFRS 9: Financial Instruments for financial reporting periods beginning on or after 01.01.2018 as stipulated by the Institute of Chartered Accountants of Sri Lanka. Currently, when computing capital adequacy ratio under the above Directions the Capital Measure is calculated on Sri Lanka Accounting Standards based figures and Risk Weighted Assets (RWA) are computed based on the balance sheet prepared for regulatory reporting in line with Directions issued by the Central Bank of Sri Lanka.In order to implement a consistent approach to measure Capital and RWA when computing capital adequacy ratio, the following measures are introduced:1. Impairment eligible for inclusion in Tier 2 capital under web based return code 20.2.3.1.1.3 - General Provisions100 per cent of impairment for assets in Stage 1 and 50 per cent of impairment for assets in Stage 2 under SLFRS subject to a maximum limit of 1.25 per cent of RWA on credit risk under the Standardised Approach shall be eligible for inclusion in Tier 2 capital. Accordingly, licensed banks shall report the eligible impairment under the web-based return code 20.2.3.1.1.3.2. Application of Risk Weights for Non-Performing Assets (NPA)2.1 Impairment for NPA other than qualifying residential mortgage loansImpairment for assets in stage 3 under SLFRS shall be deducted from the respective credit exposures to arrive at net exposure1 and risk weighted as follows:
1 In the case of collective impairment where it is not possible to identify the impairment with specific assets, licensed banks shall apportion the impairment charges on a pro rata basis.1


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT18 July 2019EXPLANATORY NOTENo. 03 of 2019(i) Web-based return code 20.3.1.11.1.0 - licensed banks shall report unsecured portion of NPA, other than qualifying residential mortgage loans, where stage 3 impairment under SLFRS is equal to or more than 20 per cent of the carrying value of the respective financial asset or group of assets.(ii) Web-based return code 20.3.1.11.2.0 - licensed banks shall report unsecured portion of NPA, other than qualifying residential mortgage loans, where stage 3 impairment under SLFRS is less than 20 per cent of the carrying value of the respective financial asset or group of assets.2.2 Impairment for NPA secured by Residential PropertyImpairment for assets in stage 3 under SLFRS shall be deducted from the respective credit exposures to arrive at net exposure1 and risk weighted as follows:(i) Web-based return code 20.3.1.12.1.0 - licensed banks shall report NPA secured by residential property, where stage 3 impairment under SLFRS is equal to or more than 20 per cent of the carrying value of the respective financial asset or group of assets.(ii) Web-based return code 20.3.1.12.2.0 - licensed banks shall report NPA secured by residential property, where stage 3 impairment under SLFRS is less than 20 per cent of the carrying value of the respective financial asset or group of assets.3. Foreign Claims on Central Government(i) Web-based return code 20.3.1.1.1.2 - Licensed banks shall deduct respective SLFRS based impairment charge, if any, from claims on foreign currency denominated securities issued by Government of Sri Lanka before applying the risk weight when computing the capital charge under Basel III. A A M ThassimDirector of Bank Supervision2


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT18 July 2019 EXPLANATORY NOTE No. 04 of 2019Interpretations for Banking Act Directions No. 12 of 2018 on Leverage Ratio under Basel III for Licensed Commercial Banks and Licensed Specialised BanksThe Bank Supervision Department issued Explanatory Note 03 of 2019 on 18 July 2019 to ensure the consistency of capital and risk weighted assets computation in terms of the Banking Act Directions No. 01 of 2016 on Capital Requirements under Basel III considering the implications of adoption of Sri Lanka Accounting Standard - SLFRS 9: Financial Instruments.Accordingly, with a view to ensuring consistency licensed banks shall hereinafter use Sri Lanka Accounting Standards based Statement of Financial Position to compute the exposure measure in the Leverage Ratio computation under Basel III whilst computation of off-balance sheet exposure remains the same. A A M ThassimDirector of Bank Supervision


Explanatory Note No. 0 5 of 2019
(3rd Explanatory Note for Circular No. 07 of 2019)

Bank Supervision Department
        27 August  2019

INTERPRETATIONS FOR  CIRCULAR NO. 07 OF 2019 ON
CONCESSIONS GRANTED TO TOURISM INDUSTRY

The following interpretatio ns are issued in relation to the Circular No. 07 of 2019 dated 08
May 2019 on Concessions Granted to Tourism Industry .

1. Registration  Requirements
In line with the Cabinet  decision to extend the concessions granted  to tourism sector
to music groups who ar e registered at the Department of Cultural Affairs, licensed
banks are informed  that such persons and entities are exempted from the requirement
to register with Sri Lanka Tourism Development Authority, in order to avail the
concessio ns granted to tourism industry.

********


September 2019MONETARY BOARD CENTRAL BANK OF SRI LANKAMONETARY LAW ACT ORDERNo. 02 of 2019ENHANCING EFFICIENCY OF THE TRANSMISSION OF RECENT POLICY DECISIONS TO RUPEE DENOMINATED MARKET LENDING RATESIssued under Section 104(l)(b) of the Monetary Law Act, No. 58 of 1949, as amended.The Central Bank of Sri Lanka (CBSL) has adopted several policy measures in the recent past such as reduction of policy interest rates and the statutory reserve ratio, and imposition of maximum interest rates on Sri Lanka Rupee (LKR) deposits to reduce cost of funds of licensed commercial banks (LCBs) and licensed specialised banks (LSBs), thereby reducing interest rates of lending products in the banking sector. However, due to the unduly long time lag observed in transmitting the reduction of policy and deposit rates broadly and equitably to interest rates of lending products, the Monetary Board hereby issues an Order on the interest rates applicable on LKR denominated loans and advances granted by LCBs and LSBs, while taking cognisance of differences in their funding structures.1. Empowerment1.1In terms of Section 104(l)(b) of the Monetary Law Act, the Monetaryunder the Monetary Law Act2. Interest rates on2.1Board may from time to time fix the maximum rates of interest which LCBs and LSBs may charge for different types of loans or other credit operations.Every LCB and LSB shall reduce the annual nominal interest rateLKR denominated loans and advances2.2applicable for all LKR denominated loans and advances, excluding credit facilities mentioned in Order 2.3 and credit facilities exempted under Order 5 below, by at least 200 basis points by 15.10.2019, in comparison to the interest rate applicable to the respective loans and advances as at 30.04.2019.However, if the annual nominal interest rate applicable to any LKR denominated loan or advance as at the date of this Order or anytime thereafter is 12.5 per cent or lower, it shall not be mandatory to give effect to the reduction required


is 12.5 per cent or lower, it shall not be mandatory to give effect to the reduction required under Order 2.1 above. Further, in cases where the applicable annual nominal interest rate as at the date of this Order or anytime thereafter is 12.5 per cent or less, the bank shall not increase the interest rates of such loans and advances from the level maintained as at the date of this Order.1


MONETARY BOARD CENTRAL BANK OF SRI LANKA^September 2019 MONETARY LAW ACT ORDER No. 02 of 20192.3 Every LCB shall reduce the following product-wise lending rates to the maximum levels outlined herein, by 01.11.2019:(i) Interest rates on credit card advances to 28 per cent per annum.(ii) Interest rates on pre-arranged temporary overdrafts to 24 per cent per annum.2.4 Every LCB and LSB shall reduce the penal interest rates charged on all loans and advances, including credit facilities already granted, to a level not exceeding 400 basis points per annum, for the amount in excess of an approved limit or in arrears, during the overdue period, with effect from 15.10.2019.3. Maximum 3.1AverageWeighted Prime Lending Rate (AWPR)3.23.33.44. Monitoring 4.1(i) Every LCB shall reduce its weekly AWPR by at least 250 basis points by 27.12.2019, compared to its AWPR published by CBSL as at 26.04.2019 in the Weekly Economic Indicators publication.(ii) In the interim, every LCB shall reduce its weekly AWPR by at least 150 basis points by 01.11.2019, compared to its AWPR published by CBSL as at 26.04.2019.If the Weekly Economic Indicators published by CBSL as at 26.04.2019 does not contain AWPR of an LCB, such LCB shall maintain an AWPR not exceeding 9.5 per cent per annum.Order 3.1 above shall not apply to LCBs, whose AWPR reaches or falls below 9.5 per cent per annum as at the date of this Order or anytime thereafter. However, such LCB shall not increase its weekly AWPR above 9.5 per cent.Upon complying with Order 3.1 above, any LCB shall not increase its AWPR from the reduced level.All LCBs and LSBs shall ensure the accuracy of interest rate data submitted to CBSL and maintain internal documented recordselectronically or manually, in relation to the reductions in interest rates in respect of each loan and advance to which this Order applies.2


24- September 2019MONETARY BOARD CENTRAL BANK OF SRI LANKAMONETARY LAW ACT ORDER5. Exemptions 5.1
6. Implementation 6.1No. 02 of 2019Following categories of loans and advances shall be exempted from the requirements in Order 2 above.(i) Loans and advances granted before 15.10.2019 on fixed term interest rate contracts, until the end of the contracted fixed rate period. For avoidance of doubt these will include, leases and facilities collateralized by gold where applicable. However, the provisions of this Order shall apply to any revision to the annual nominal interest rate effected on or after 15.10.2019.(ii) Loans and advances collateralized by LKR deposits maintained with LCBs and LSBs, provided that the margin over the deposit rate is not increased above the margin applied by the bank to such advances as at the date of this Order.(iii) Loans and advances granted under a refinance scheme supported by the Government of Sri Lanka or CBSL or on concessionary terms under a general restructuring arrangement where the applicable interest rate or the basis of its determination is stipulated in such scheme or arrangement.These Orders shall be effective from the date of the Order.
Dr. Indrajit CoomaraswamyChairman of the Monetary Board and Governor of the Central Bank of Sri Lanka
3


MONETARY BOARD CENTRAL BANK OF SRI LANKA24 September 2019 MONETARY LAW ACT ORDER No. 03 of 2019MAXIMUM INTEREST RATES ON SRI LANKA RUPEE DEPOSITSOF LICENSED BANKSMonetary Law Act Order No. 01 of 2019 dated 26.04.2019 on Maximum Interest Rates on Sri Lanka Rupee Deposits of Licensed Banks is hereby rescinded.Dr. Indrajit CoomaraswamyChairman of the Monetary Board and Governor of the Central Bank of Sri Lanka


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT
18 January 2019 CIRCULAR No.02 of2019
PUBLICATION OF ANNUAL AND QUARTERLY FINANCIAL STATEMENTS
AND OTHER DISCLOSURES BY LICENSED BANKS
1. Requirements
under the
Banking Act
2. Empowerment 2.1
3. Scope of
Application1.1 In terms of Sections 38 and 76 (H) of the Banking Act No. 30 of
1988 as amended, all licensed banks (LBs) incorporated or
established within Sri Lanka and all LBs incorporated outside Sri
Lanka shall:
(i) transmit its audited financial statements within five months
after the close of its financial year to the Director of Bank
Supervision;
(ii) publish the audited financial statements at least once within
that period in Sinhala, Tamil and English daily newspapers
circulating in Sri Lanka; and
(iii) exhibit them in a conspicuous place at each of its places of
business until the financial statements for the succeeding
financial year are prepared and exhibited.
In terms of Sections 38(3) and 76 H of the Banking Act, the
Monetary Board may specify the form of the financial statements
including any disclosure requirements to be made and where such
form is specified, financial statements of every licensed bank shall
be prepared in such form as may be specified.
Licensed banks shall use the specified formats given in Annex I and
Annex II to this Circular for the preparation, presentation and
publication of annual and quarterly financial statements,
respectively.
LBs incorporated in Sri Lanka shall publish financial statements
under both solo and consolidated basis.
In terms of Section 28 of the Banking Act, the formats referred to
in 3.1 above shall also be used for the preparation of financial
statements of the Off-shore Banking Units of licensed banks.3.1
),2
aa-).-)

data\CBSL\2019\Circular No. 2 of 2019 to be uploaded in CBSL WEB.pdf


18 Januarv 2019CENTRAL BANK OF SRI LANKA
BANK SUPERYISION DEPARTMENT
CIRCULAR No.02 of 2019
4. Compliances 4.tLicensed banks shall publish information with respect to the entire
bank, i.e., including the off-shore banking unit and in the case of
licensed commercial banks incorporated in Sri Lanka, any branches
established abroad by the licensed bank.
Licensed banks shall publish annual and quarterly financial
information and other disclosures in the Annual Report, Press and
Website as given in Table 1 below.
Table 1: Publication of Annual and Quarterly
Minimum Disclosures
Type of Statement/InformationFrequency and
Location of Publication
Quarterly Annually
Income Statement P,W A,P,w
Statement of Comprehensive
IncomeP,W A,P,w
Statement of Financial Position P,W A,P,W
Statement of Changes in Equity P,W A,P,w
Statement of Cash Flows P,W A,P,W
Analysis of Financial Instruments
on Measurement Basisw A,W
Analysis of Loans and Advances W A,W
Analysis of Deposits w A,W
Selected Performance Indicators P,W A, P,W
A - Annual ReportP-Press W-Website
Licensed banks shall report statement of financial position as at the
end of the relevant quarter and shall publish comparative figures for
the same based on the audited financial statements for the previous
financial year.
The reporting period in respect of the income statement should be
the cumulative position as at the end of the relevant quarter in the
financial year. Comparative figures for the income statement should4.2
4.3
4.4


18 January 2019CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT
CIRCULAR No.02 of2019
4.5
4.6
4.7
4.8
4.9
5.1 5.
5.2Responsibilities
of the
Managementbe in respect of the same reporting period in the previous financial
year.
Licensed banks shall include details of audit qualifications, if any,
on audited financial statements when publishing such statements in
the Press and Website.
Licensed banks shall report selected key performance indicators
(KPIs) and the relevant ratios as at the reporting date while
comparative KPIs and ratios should be based on the audited
financial statements for the previous financial year.
Licensed banks incorporated outside Sri Lanka may publish the
latest available KPIs relating to the global operations of such bank
on a quarterly basis, and the ratios based on audited financial
information along with the audited financial statements of the parent
bank. Such information may be reported in home currency or in US
Dollars in the column for reporting the information of the Group.
The key performance indicators should be computed according to
the definitions given in the respective Banking Act Directions,
Determinations, Circulars and Guidelines.
If a 'nil' balance has to be reported in respect of an item in the
format, such items should be reported as 'nil', instead of deleting
the item.
The Board of Directors and the management of the licensed bank
shall provide the true status of the financial condition of the bank,
in discharging their fiduciary responsibility.
Licensed banks shall ensure that adequate publicity is given to non-
compliance with the prudential ratios, if any, and the measures
being taken by the licensed bank to meet these ratios.


18 January 2019CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT
CIRCULAR No.02 of2019
6. Timeline for
Publication of
Financial
Statements
7. Effective
date/period
8. Revocations 8.15.3
5.4
6.1
7.1
7.26.2
6.3Licensed banks shall avoid publishing incorrect
statements/information and non-disclosure of adequate information
required for decision making process.
Licensed banks shall adopt the disclosure requirements contained
herein as a minimum and are encouraged to make additional
disclosures for the benefit of the general public.
Licensed banks shall publish quarterly publication within two
months from the end of each quarter, at least once in Sinhala, Tamil
and English daily newspaper.
Publication of annual audited financial statements shall be made
within five months from the end of the financial year.
If the bank publishes its annual audited financial statements within
three months from the end of the financial year, the requirement to
publish the financial statements for the fourth quarter in terms of
6.1 above would not arise.
Formats for quarterly reporting will be applicable for quarters
beginning on or after 0 1 .01 .20 I 9.
Formats for annual reporting will be applicable for financial years
beginning on or after 01.01.2018.
The following Circulars are hereby revoked:
(i) Circular No: BS/38/90 dated 02.06.1998 on Preparation of
Annual Audited Accounts of Banks;
(ii) Circular No: B3162197 dated 10.09.2001 on Public
Disclosure by Publication of Bank Accounts in the Press;
(iii) Circular No: 02104100310401/001 dated 30.09.2005 on
Public Disclosure by Publication of Quarterly Financial
Statements of Banks in the Press;
(iv) Circular No: 02104100310401/001 dated 26.01.2006 on
Publication of Quarterly Financial Statements of Banks in
the Press;


18 January 2019CENTRAL BANK OF SRI LANKA
BAI\K SUPERYISION DEPARTMENT
CIRCULAR No.02 of2019
(v) Circular dated 13.02.2006 on Submission of Audited
Financial Statements by Banks;
(vi) Circular No: 02104100310401/001 dated 21.02.2006 on
Publication of Audited Financial Statements of Banks in the
Press;
(vii) Circular No: 02/041003/0401/001 dated 24.03.2006 on
Inadequate/Incorrect Disclosures/Press Statements by
Banks;
(viii) Circular No : 02 I 17 I 900 I 000 I I 04 dated 1 | .02.20 13 on Public
Disclosure by Publication of Quarterly Financial Statements
of Banks in the Press;
(ix) Circular No: 02117190010001104 dated 11.02.2013 on
Preparation, Presentation and Publication of Annual
Audited Accounts of Banks;
(x) Circular No:02l171800/0002/002 dated 17.09.2013 on
Publication of Financial Statements and Other Disclosures
on the Websites; and
(*i) Circular No. 02117190010001/004
Additional Quarterly Disclosure indated 11.10.2013 on
the Press and on the
Websites.
A A M Thassim
Director of Bank Supervision


Annex I

SPECIFIED FORMAT FOR THE PREPARATION , PRESENTATION
AND PUBLICATION OF
ANNUAL AUDITED FINANCIAL STATEMENTS  OF LICENSED
BANKS

For Financial Years commencing on or  after  01.01.2018


Financial Statements
Table of Contents
           Page No.
Financial Statements
Income Statement           1
Statement  of Comprehensive Income        2
Statement of Financial Position         3
Statement of Changes in Equity         4
Statement of Cash Flow s         5

Notes to the Financial Statements
1 Corporate Information         6
2 Accounting Policies          6
3 Segment Information          7
4 Net Interest Income          7
5 Net Fee and Commission Income        8
6 Net Gain/(Loss) from Trading        8
7 Net Fair Value Gain/( Loss ) from Financial Instruments at Fair Value  through
 Profit or Loss           8
8 Net Gain/(Loss) from  Derecognition of  Financial Assets     9
9 Net O ther Operating Income         9
10 Impairment Charges           9
11 Personnel Expenses          10
12 Other Expenses          10
13 Tax Expense s          10
14 Earnings Per Share          11
15 Analysis of Financial Instruments by Measurement Basis     12
16 Cash and  Cash Equivalents         13
17 Balances with Central Banks         13
18 Placements with Banks         13
19 Derivative Financial Instruments         14
20 Financial Assets Recognized through Profit or L oss     14
21 Financial Assets at Amortised Cost – Loans and A dvances     15


22 Financial Assets at Amortised Cost – Debt and O ther Instruments    16
23 Financial Assets Measured at Fair Value Through Other Comprehensive I ncome  17
24 Investment s in Subsidiaries         18
25 Investments in Asso ciates and Joint Ventures      18
26 Proper ty, Plant and Equipment        19
27 Investment Properties          20
28 Goodwill and Intangible Assets        21
29 Deferred  Tax Assets/Liabilities        21
30 Other Assets           22
31 Due to Banks           22
32 Derivative  Financial Instruments        22
33 Financial Liabilities Recognized Through Profit or L oss    22
34 Financial L iabilitie s at Amortised Cost       23
35 Debt Securities Issued          23
36 Retirement B enefit Obligations        24
37 Current Tax Liabilities         24
38 Other Provisions          24
39 Other Liabilities          24
40 Due to Subsidiaries          24
41 Stated C apital/Assigned Capital        25
42 Statutory Reserve Fund         25
43 Retained Earnings          25
44 Other Reserves          25
45 Non-controlling Interests         26
46 Contingent Liabilities and Commitments       26
47 Related Party Disclosures         26
48 Net As sets Value per Ordinary Share        26
49 Other Disclosure R equirements        27


1
 ……………….. BANK
INCOME STATEMENT
FOR THE YEAR ENDED ………………

  Bank  Group
In Rupee s Million   Note  20XX  20XX  20XX  20XX
Interest income
Interest expenses
Net interest income  04
Fee and  commission income
Fee and commission expenses
Net fee and commission income  05
Net gain/(loss) from trading  06
Net fair value gains/(loss es) from  financial
instruments  at fair value through profit or loss  07
Net gain s/(loss es) from  derecognition of financial
assets    08
Net other operating income  09
Total operating income
Impairment  charges  10
Net operating income
Personnel expenses
Depreciation and amortization expenses  11
Other expenses  12
Operating profi t/(loss) before VAT & NBT on
financial services
Value Added Tax (VAT)  on financial services
Nation Building Tax (NBT) on financial services
Operating profit/(loss) after VAT & NBT on
financial services
Share of profits of associates and joint venture s
Profit/(loss) before tax
Income t ax expense s 13
Profit/(loss) for the year
Profit a ttributable to:
Equity holders of the parent
Non-controlling interests
Earnings per share on profit      14
Basic earnings per ordinary share
Diluted earnings per ordinary share


2

……………… BANK
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED …………..
  Bank  Group
In Rupee s Million  Note  20XX  20XX  20XX  20XX
Profit/(loss) for the year
   Items that will be reclassified to income statement
Exchange differences on translation of foreign
operations
Net gain s/(loss es) on cash flow hedges
Net gain s/(loss es) on investments in debt
instruments measured at fair value through other
comprehensive income
Share of profits of associates and joint ventures
Debt instruments at fair value through other
comprehensive income
Others (specify)
Less: Tax expense relating to items that will be
reclassified to income statement

Items that will not be reclassified to income statement
Change in fair value on investments in equity
instruments designated at fair value through other
comprehensive income
Change in fair value attributable to change in the
Bank’s own credit risk on financial liabilities
designated at fair value through profit or loss
Re-measurement of post -employment benefit
obligations
Changes in revaluation surplus
Share of profits of associates and joint ventures
Others (specify)
Less: Tax expense relating  to items that will not be
reclassified to income statement
Other comprehensive income for the year, net of
taxes
Total comprehensive income for the yea r
Attributable to:
Equity holders of the parent
Non-controlling interes ts


3

……………..BANK
STATEMENT OF FINANCIAL POSITION
AS AT  ………………..
  Bank  Group
In Rupee s Million  Note  20XX  20XX  20XX  20XX
Assets
Cash  and cash equivalents  16
Balances with central banks  17
Placements with banks  18
Derivative financial instruments  19
Financial assets  recognized through profit or loss
      -  measured at fair value  20
      -  designated at fair value
Financial assets at amortised cost
      - loans and advances
21
      - debt and other instruments  22
Financial assets measured at fair value through
other comprehensive income
23
Investment in s ubsidiaries   24
Investments in associates and joint ventures  25
Property, plant and equipment  26
Investment properties  27
Goodwill and intangible assets  28
Deferred tax assets   29
Other assets  30
Total assets
Liabilities
Due to banks  31
Derivative  financial instruments  32
Financial liabilities  recognized through profit or
loss
     - measured at fair value
33

     - designated at fair value
Financial liabilities at amortised cost
     - due to depositors
     - due to debt securities holders  34

     - due to other borrowers
Debt securities issued
35
Retirement benefit obligations  36
Current tax liabilities  37
Deferred tax liabilities  29
Other provisions  38
Other liabili ties
Due to subsidiaries  39
40
Total liabilities
Equity
Stated capital/Assigned capital  41
Statutory reserve fund  42
Retained earnings  43
Other reserves  44
Total shareholders’ equity
Non-controlling interests  45
Total equity
Total equity and liabilities
Contingent liabilities and commitments  46
Memorandum Information
Number of Employees
Number of Branches
Note: Amounts stated are net of impairment  and depreciation.