Directions, Determinations, and Circulars issued to Licensed Commercial Banks  383
Annex  III
Suggested format for the Display of Service Charges, Fees & Commissions
Description Rs.   as at ……..
SERVICE CHARGES
Savings Accounts
Charges for non-maintenance of account balance as stipulated minimum, etc…
Current Accounts
Current account monthly service charge
Charges for account statement
Cheque issuing cost
Stop payment order
Return cheques due to insufficient funds, etc…
Remittances
Inward credit to Sri Lanka rupee account
Inward remittance to foreign currency account
Issue of foreign currency demand draft, pay orders, etc…
Traveler’s Cheques
Encashment of Traveler's Cheques
Sale of Traveler's Cheques, etc …
ATMs
Issuing Fee
ATM cash withdrawal - Own Bank
ATM cash withdrawal - Other Bank, etc…
Credit Cards - Main Cardholder
Annual fee
Late Payment charges
Interest charges, etc …
FEES & COMMISSIONS
SLIPS Payment Charges
RTGS Payment Charges
Facility Arrangement Fees - Overdrafts
    * Security Backed
    * Clean Basis
Early Settlement Fees
    * Residential Housing
    * Vehicle Loans
Cheque Purchase Commission
LC Commission
    * LC Opening Fee & Commission
    * LC Negotiation Charges, etc …
Shipping Guarantees
Bank Guarantees
Acceptance


384 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Ref. No. : 02  / 05 / 006 / 0100  / 001
Bank Supervision Department
28th October 2003
To : All Licensed Commercial Banks and
        all Licensed Specialised Banks
Dear Sir  / Madam,
DISPLAY OF INTEREST RATES AND EXCHANGE RATES
The Central Bank of Sri Lanka welcomes the efforts made by banks to publish their deposit and
lending rates. You would no doubt appreciate that adequate market information is vital for improving
market efficiency and in promoting healthy competition.
As another step forward in this direction, all licensed commercial banks and specialised banks
are requested to compile a representative list of their interest rates on deposits and advances and their
buying and selling rates for foreign currencies and to display such information to the general public in
all branches and other banking outlets. You would recall that we agreed at an earlier Bank Managers’
Meeting to follow this practice, but it is observed that not all banks adequately do so.
All licensed commercial banks and specialised banks are informed that the display of interest
rates and exchange rates of banks should commence from 1st January, 2004 the latest. A format
suggested for the display of information is enclosed herewith.
Please forward a copy of the list of interest rates and exchange rates displayed to this Department
periodically as and when it is revised.
Yours faithfully,
Director of Bank Supervision
Suggested Format for the Display of Interest Rates and Exchange Rates
Bank ………………………………
Interest Rates on Deposits [per cent per annum]  Rate as at ……
Savings Deposits
 Fixed Deposits - 12 months
  Interest payable monthly
  Interest payable at maturity
 NRFC Savings Deposits - US Dollar
              - Sterling Pound
 NRFC One Year Fixed Deposits - US Dollar
                - Sterling Pound

Interest Rates on Advances [per cent per annum]  Rate as at ……


- Sterling Pound

Interest Rates on Advances [per cent per annum]  Rate as at ……
Export Bill Finance - Rupee Facilities
Import Bill Finance - Rupee Facilities
Lease Finance
Lending to Medium Scale Industries (up to 5 years)
Residential Housing
Pawning
US Dollar Loans to Exporters
 Rate : Rupees per unit of Foreign Currency as at ………
    Exchange Rates  Currency  Traveller’s Cheques
 Buying Rate  Selling Rate  Buying Rate  Selling Rate
US Dollar
Sterling Pound
Yen
Euro
Australian Dollar
Singapore Dollar
Indian Rupee


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  385
Ref. No. : 02  / 04 / 003 / 0401  / 001
Bank Supervision Department
24 March 2006
To :  CEOs of Licensed Commer cial Banks and
   CEOs of Licensed Specialised Banks
Dear Sirs,
INADEQUATE  / INCORRECT DISCLOSURES  / PRESS STATEMENTS BY BANKS
As intimated to you at the Chief Executive Officers meeting held on 23 March 2006, there have
been several instances where banks have attempted to mislead the public by publishing incorrect
statements/data or by not publishing certain aspects of information with regard to non-compliance with
statutory regulations.
Such attempts by banks to mislead the general public totally negate the efforts of the regulator to
educate the public on the true state of the banks in the industry, and it would be futile to further enhance
our efforts in this regard, if immediate action is not taken by the regulator to stop such deception. The
Central Bank of Sri Lanka (CBSL) will be faulted for permitting the banks to misrepresent their financial
condition to the public.
It is incumbent on bank management, in the discharge of their fiduciary responsibility, to project the
true picture of their financial condition to the public.
Therefore, in the interest of providing accurate information to the public for making informed
decisions, all banks are required, in making statements to the press, and in publishing the financial results
of banks, to ensure that adequate publicity is given to non-compliance, if any, with the prudential ratios
and the measures being taken by the bank to meet these ratios.
Where banks, which are not compliant with regulatory requirements, do not make such disclosures
to the public in press interviews or statements, the CBSL, as the regulator will be compelled to correct
such information in the public domain.
Yours faithfully,
Sgd, Director of Bank Supervision
Copy to : Secretary-General, SLBA


386 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Ref. No. : 02  / 04 / 003 / 0401  / 001
Bank Supervision Department
21 February 2006
To :  The CEOs of all Licensed Commer cial Banks and
   all Licensed Specialised Banks
Dear Sirs,
PUBLICATION OF AUDITED FINANCIAL STATEMENTS OF BANKS IN THE PRESS
Further to the circulars issued with regard to the publication of financial statements of banks in the
press, dated 30 September 2005 and 26 January 2006.
Considering the representations made by the banks with regard to the practical difficulties faced by
them with regard to the time period for publication of audited financial statements of banks in the press,
in order to qualify for exemption from publishing the last quarter unaudited results, all licensed banks
are informed as follows:
o 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 the circular dated 30 September 2005 would not be mandatory.
o The licensed commercial banks incorporated abroad may publish the latest available key
performance indicators 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.
o W ith regard to the format for publication of audited financial statements, all banks should use
the format issued on 30 September 2005 for the publication of quarterly financial statements.
Yours faithfully,
Sgd, Director of Bank Supervision


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  387
Ref. No. : 02  / 04 / 003 / 0401  / 001
Bank Supervision Department
30 September 2005
To : The CEOs of all Licensed Commercial Banks and
        all Licensed Specialised Banks
Dear Sirs,
PUBLIC DISCLOSURE BY PUBLICATION OF
QUARTERLY FINANCIAL STATEMENTS OF BANKS IN THE PRESS
 As discussed at the meeting of the CEOs of LCBs held on 28 July 2005, the format for publication
of quarterly financial statements in the press has been revised in consultation with the representative of
banks, and is attached herewith, along with the suggested Sinhala and Tamil translations.
2. T he revision is aimed at increasing the transparency of banking operations, and to align the
publication requirements with those of other regulators. Accordingly, the formats have been drafted
incorporating the disclosure requirements of the Securities and Exchange Commission (SEC)(in
respect of listed banks) and the Sri Lanka Accounting Standards, as far as possible. In addition, selected
performance indicators, including key prudential ratios have been included, as agreed with the banks.
3. The information published should be in respect of the entire bank, i.e., including the off-shore
banking unit and in the case of LCBs incorporated in Sri Lanka, any branches abroad.
4. The new format contains two parts viz;
• Part  I : The format for the summarized balance sheet, income statement, and the statement of
changes in equity and reserves and selected performance indicators 1/
• Part II :  Instructions for Preparation of Bank Accounts for publication in the press 1/
5. Balance Sheet information should be reported as at end of the relevant quarter. Comparative figures
to be published should be based on the audited financial statements for the previous financial year .
5.1 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 should be in respect of the same
reporting period in the previous financial year.
5.2 In the case of selected performance indicators, the relevant ratios as at the reporting date should be
reported while the comparative ratios should be based on the audited financial statements for the previous
financial year.
6. The publication should be made within two months from the end of each quarter, at least once in
an English, Sinhala and Tamil newspaper.  If the bank publishes its annual audited financial statements
within two months from the end of the financial year, the requirement to publish the financial statements
for the fourth quarter in terms of these instructions would not be mandatory.
7. The licensed commercial banks incorporated abroad may report information pertaining to the global
operations of the parent bank, in the column for reporting the information on the Group. Such information
may be reported in the currency of the home country or in US Dollars. In view of the heterogeneous


388 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
character of group accounts of foreign banks, the banks are requested to make every endeavour to publish
all items given in the agreed format.
8. The disclosure requirements contained herein specify the minimum requirements to be adopted
by the banks and all banks are encouraged to make additional disclosures for the benefit of the general
public. In addition, the banks listed on the Colombo Stock Exchange should comply with any additional
regulations imposed by the SEC with regard to publication of financial information.
9. The revised publication format will be effective for publication of banks’ financial statements from
the 3rd quarter of 2005 onwards.
9.1 The codes indicated in the formats are for cross reference with the definitions in the instructions and
not for publication.
10. The circular dated 30 January 2003 on the publication of quarterly financial statements is hereby
rescinded.
 Please acknowledge receipt of this circular .
Yours faithfully,
Sgd, Director of Bank Supervision


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  389
Ref. No. : 02  / 04 / 003 / 0401  / 001
Bank Supervision Department
26 January 2006
To : CEOs of all Licensed Banks
Dear Sirs,
PUBLICATION OF QUARTERLY FINANCIAL STATEMENTS OF BANKS
IN THE PRESS
By circular No. 02/04/003/0401/001 dated 30 September 2005, all banks were informed of the
requirements with regard to the publication of quarterly financial statements of banks in the press, which
was applicable for the publication of financial statements from the 3rd Quarter of 2005 onwards.
Several discrepancies were observed with regard to the publications in respect of the 3rd Quarter of
2005. Therefore all banks are informed that they should comply with all the requirements in the above
circular. The following points should be noted:
 1. The time frame for publication is within two months from the end of each quarter .
 2. The publication should be made in a Sinhala, English and Tamil daily newspaper – This
requirement is to inform the public of the financial condition of the banks and is uniformly
applicable to all banks.
 3. The format specified by the circular should be conformed to. 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 entire row from the format.
 4. The key performance indicators should be computed according to the definitions provided
by the BSD.
With regard to the publication of accounts by licensed commercial banks incorporated abroad, the
publication of global accounts is mandatory on an annual basis, while the banks may publish information
relating to the latest available period on a quarterly basis. However, all such banks should publish
quarterly, the selected performance indicators such as capital adequacy ratio, return on assets, return on
equity, and the non-performing advances ratio of the parent bank for the respective quarter.
Yours faithfully,


Yours faithfully,
Sgd, Director of Bank Supervision
(Formats referred to in the Circular are replaced with Circular No. 02/17/900/0001/04 dated 11.02.2013)


390 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Our Ref. : 02  / 17 / 900 / 0001  / 04
Bank Supervision Department
11 February 2013
To : CEOs of all Licensed Commercial Banks and
       Licensed Specialised Banks
Dear Sir / Madam,
PUBLIC DISCLOSURE BY PUBLICATION OF
QUARTERLY FINANCIAL STATEMENTS OF
BANKS IN THE PRESS
We refer to our previous correspondence and discussions on the above and enclose the
new format for the publication of quarterly financial statements of licensed commercial banks and
licensed specialised banks in the press effective from the 1st quarter of 2013.
Accordingly, format referred to in the paragraph No. 4 of the Circular dated 30 September 2005
on the above is replaced with the format in Annex.
Yours faithfully,
(Mrs.) T M J Y P Fernando
Director of Bank Supervision
Encl.
Copy to :  The Secretary-General, Sri Lanka Banks’  Association (Gurantee) Ltd.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  391
Annex
SPECIFIED FORMAT FOR THE PUBLICATION OF
QUARTERLY FINANCIAL STATEMENTS OF
LICENSED COMMERCIAL BANKS AND LICENSED SPECIALISED BANKS
IN THE PRESS
………….. BANK
INCOME STATEMENT
FOR THE PERIOD ENDED ………….
In Rupees Thousands
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
From
DD/MM/YY
To
DD/MM/YYFrom
DD/MM/YY
To
DD/MM/YYFrom
DD/MM/YY
To
DD/MM/YYFrom
DD/MM/YY
To
DD/MM/YY
Interest income
Interest expenses
Net interest income
Fee and commission income
Fee and commission expenses
Net fee and commission income
Net gain / (loss) from trading
Net gain / (loss) from financial instruments
  designated at fair value through
  profit or loss
Net gain / (loss) from financial investments
Other operating income (net)
Total operating income
Impairment for loans and other losses
 Individual impairment
 Collective impairment
 Others
Net operating income
Personnel expenses
Depreciation and amortisation
Other expenses
Operating profit/(loss)
 befor e value added tax (V AT)
Value added tax (V AT) on financial services


392 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Bank Group
From
DD/MM/YY
To
DD/MM/YYFrom
DD/MM/YY
To
DD/MM/YYFrom
DD/MM/YY
To
DD/MM/YYFrom
DD/MM/YY
To
DD/MM/YY
Profit / (loss) for the period
Other comprehensive income, net of tax
Changes in revaluation surplus
Actuarial gains and losses on
defined benefit plans
Gains and losses
(arising from translating the financial
statements of a foreign operation)
Gains and losses on re-measuring
available-for-sale financial assets
Gains and losses on cash flow hedges
Others
Share of profits of associates
and joint ventures
Less: T ax expense/(income) relating to
components of other comprehensive
income
Other comprehensive income for the
period, net of taxes
Total comprehensive income for the period
Attributable to:
Owners of the parent
Non-controlling interests………….. BANK
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED ………….
In Rupees ThousandsOperating profit/(loss)
  after value added tax (V AT)
Share of profits of associates and
  joint ventures
Profit/(loss) before tax
Tax expenses
Profit/(loss) for the period
Profit attributable to:
Owners of the parent
Non-controlling interests
Earnings per share on profit
Basic earnings per ordinary share
Diluted earnings per ordinary share(Contd.)


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  393
………….. BANK
STATEMENT OF FINANCIAL POSITION
AS AT ………….
In Rupees Thousands
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
As at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YY
Assets
Cash and cash equivalents
Balances with central banks
Placements with banks
Derivative financial instruments
Other financial assets held-for-trading
Financial assets designated at fair value
 through profit or loss
Loans and receivables to banks
Loans and receivables to other customers
Financial investments – Available-for-sale
Financial investments – Held-to-maturity
Investments in subsidiaries
Investments in associates and joint ventures
Property, plant and equipment
Investment properties
Goodwill and intangible assets
Deferred tax assets
Other assets
Total assets
Liabilities
Due to banks
Derivative financial instruments
Other financial liabilities held-for-trading
Financial liabilities designated at fair value
 through profit or loss
Due to other customers
Other borrowings
Debt securities issued
Current tax liabilities
Deferred tax liabilities
Other provisions
Other liabilities
Due to subsidiaries
Subordinated term debts
Total liabilities


394 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
………….. BANK
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED ………….
BANK / GROUP  In Rupees Thousands
Stated capital/
Assigned
capitalReserves
Total
Non-controlling interest
Total equityOrdinary
voting shares
Ordinary
non-voting shares
Assigned capital
Reserve fund
Revaluation reserve
Retained earnings
Other reserves
Balance as at DD/MM/YY (Opening balance)
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income (net of tax)
Total comprehensive income for the year
Transactions with equity holders, recognised
directly in equity
Share issue/increase of assigned capital
Share options exercised
Bonus issue
Rights issue
Transfers to reserves during the period
Dividends to equity holders
Profit transferred to head office
Gain/(loss) on revaluation of Property, Plant and
Equipment (if cost method is adopted)
Others (Please specify)
Total transactions with equity holders
Balance as at DD/MM/YY (Closing balance)           (Contd.)
Equity
Stated capital/Assigned capital
Statutory reserve fund
Retained earnings
Other reserves
Total shareholders’ equity
Non-controlling interests
Total equity
Total equity and liabilities
Contingent liabilities and commitments
Memorandum Information
 Number of Employees
 Number of Branches
Note: Amounts stated are in net of impairment and depreciation


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  395
………….. BANK
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED ………….
In Rupees Thousands
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
DD/MM/YY DD/MM/YY DD/MM/YY DD/MM/YY
Cash	flows	from	operating 	activities
Profit before tax
Adjustment for :
Non-cash items included in profits before tax
Change in operating assets
Change in operating liabilities
Net gains from investing activities
Share of profits in associates and joint ventures
Dividend income from subsidiaries and associates
Interest expense on subordinated debt
Others (please specify)
Contribution paid to defined benefit plans
Tax paid
Net cash generated from operating activities
Cash	flows	from	investing	activities
Purchase of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Purchase of financial investments
Proceeds from the sale and maturity of financial
investments
Net purchase of intangible assets
Net cash flow from acquisition of investment
in subsidiaries and associates
Net cash flow from disposal of subsidiaries
Proceeds from disposal of associates and joint ventures
Dividends received from investment
in subsidiaries and associates
Others (please specify)
Net cash (used in)/from investing activities
Cash	flows	from	financing	activities
Net proceeds from the issue of ordinary share capital
Net proceeds from the issue of other equity instruments
Net proceeds from the issue of subordinated debt
Repayment of subordinated debt
Interest paid on subordinated debt
Dividend paid to non-controlling interest
Dividend paid to shareholders of the parent company
Dividend paid to holders of other equity instruments
Others (please specify)
Net	cash	from	financing	activates
Net increase/(decrease) in cash & cash equivalents
Cash and cash equivalents at the beginning of the period
Exchange difference in respect of cash & cash equivalent


Exchange difference in respect of cash & cash equivalent
Cash and cash equivalents at the end of the period
Note:   Banks have the option to use one of the two methods specified in LKAS 7
for the preparation of the statement of cash flows


396 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
………….. BANK
ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS
AS AT ………….
In Rupees Thousands
a. Bank – Curr ent period
HFTDesignated
at fair valueHTMAmortised
costAFS Hedging Total
ASSETS
Cash and cash equivalents
Balances with central banks
Placements with banks
Derivative financial instruments
Other financial assets at
 fair value through profit or loss
Loans and receivables to banks
Loans and receivables to
 other customers
Financial investments
Total financial assets
HFTDesignated
at fair valueAmortised
costHedging Total
LIABILITIES
Due to banks
Derivative financial instruments
Other financial liabilities at
 fair value through profit or loss
Due to other customers
Other borrowings
Debt securities issued
Total financial liabilities
HFT  –  Held for trading
Designated at fair value  –  Designated at fair value through profit or loss
Amortised cost  –  Loans and receivables/deposits at amortised cost
HTM  –  Held-to-maturity
AFS  –  Available-for-sale
Hedging  –  Instruments of fair value and cash flow hedging
b. Bank – Pr evious period as above
c. Gr oup – Current period as above
d. Gr oup – Previous period as above


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  397
………….. BANK
SELECTED PERFORMANCE INDICATORS (AS PER REGULATORY REPORTING)
AS AT ………….
ItemBank Group
DD/MM/YY DD/MM/YY DD/MM/YY DD/MM/YY
Regulatory Capital Adequacy
Core Capital (Tier 1 Capital), Rs. ’000
Total Capital Base, Rs. ’000
Core Capital Adequacy Ratio, as % of Risk Weighted Assets
 (Minimum Requirement, 5%)
Total Capital Adequacy Ratio, as % of Risk Weighted Assets
 (Minimum Requirement, 10%)
Assets Quality (Quality of Loan Portfolio)
Gross Non-Performing Advances Ratio, %
 (net of interest in suspense)
Net-Non Performing Advances, %
 (net of interest in suspense and provision)
Profitability
Interest Margin, %
Return on Assets (before Tax), %
Return on Equity, %
Regulatory Liquidity
Statutory Liquid Assets, Rs. ’000
Statutory Liquid Assets Ratio, %
 (Minimum Requirement, 20%)
Domestic Banking Unit
Off-Shore Banking Unit
CERTIFICATION:

We,	t he	u ndersigned, 	being	the	Chief	Executive	officer	and	the	Financial	Controller	/	Compliance
Officer	of
…………………… Bank certify jointly that:
 (a)		 the	above	statements 	have	been	prepared	in	compliance 	with	the	format	and	definitions
prescribed by the  Central Bank of Sri Lanka;
 (b)  the information contained in these statemen ts have been extracted from the unaudited
financial	statements 	of	the	bank	unless	indicated	as	audited.
 (Name )  (Name)
 (Sgd.) Chief Executive Officer   (Sgd.) Financial Controller or Compliance Officer
 Date: DD/MM/YY   Date: DD/MM/YY


398 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Ref. : 02  / 17 / 900 / 0001  / 004
Bank Supervision Department
11 October 2013
To : CEOs of all Licensed Commercial Banks and
       Licensed Specialised Banks
Dear Sir / Madam,
ADDITIONAL QUARTERLY DISCLOSURE
IN THE PRESS AND ON THE WEBSITES
Reference our Circulars dated 11 February 2013 and 17 September 2013 on Public Disclosure
by Publication of Quarterly Financial Statements of Banks in the Press and Publication of Financial
Statements and Other Disclosures on the Websites, respectively.
Every bank shall ensure additional disclosures on the following items in their quarterly publications
in the press and on their respective websites, from 3rd quarter of 2013 as given in Annex.
1. Loans and receivables to other customers
2. Loans and receivables to other customers – By product
3. Movements in individual and collective impairment during the period for loans and receivables
to other customers
4. Dues to other customers – By product
Accordingly, you are requested to take necessary measures to comply with the above.
Yours faithfully,
(Mrs.) T M J Y P Fernando
Director of Bank Supervision
Encl.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  399
Annex
ADDITIONAL QUARTERLY DISCLOSURES IN THE PRESS AND
ON THE WEBSITES
1) Loans and Receivables to Other Customers
In Rupees Thousand
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
As at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YY
Gross loans and receivables
(Less ):  Individual impairment
Collective impairment
Net loans and receivables including those
designated at fair value through profit or loss
(Less): Loans and receivables designated at fair
value through profit or loss
Net loans and receivables
2) Loans and Receivables to Other Customers – By product
In Rupees Thousand
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
As at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YY
By product-Domestic Currency
Overdrafts
Term loans
Lease rentals receivable
Credit cards
Pawning
Other loans (Please specify)
Sub total
By product-Foreign Currency
Overdrafts
Term loans
Other loans (Please specify)
Sub total
Total


400 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
3) Movements in Individual and Collective Impairment during the period for
Loans and Receivables to Other Customers
In Rupees Thousand
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
As at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YY
Individual impairment
Opening balance at DD/MM/YY
Charge/(Write back) to income statement
Write-off during the year
Other movements
Closing balance at DD/MM/YY
Collective impairment
Opening balance at DD/MM/YY
Charge/(Write back) to income statement
Other movements
Closing balance at DD/MM/YY
Total impairment
4) Due to Other Customers – By product
In Rupees Thousand
Bank Group
Current
PeriodPrevious
PeriodCurrent
PeriodPrevious
Period
As at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YYAs at
DD/MM/YY
By product-Domestic Currency
Demand deposits (current accounts)
Savings deposits
Fixed deposits
Other deposits (Please specify)
Sub total
By product- Foreign Currency
Demand deposits (current accounts)
Savings deposits
Fixed deposits
Other deposits (Please specify)
Sub total
Total


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  401
Ref. No. : BS  / 62 / 97
Bank Supervision Department
8th Floor, Renuka Building
41, Janadhipathi Mawatha
Colombo 1.
10th September, 2001
To :  All Licensed Commer cial Banks
Dear Sir,
PUBLIC DISCLOSURE BY PUBLICATION OF BANK ACCOUNTS IN THE PRESS
Your attention is drawn to our circular No.BS/62/97 dated 29.01.1999 on the above subject.
If the audited accounts of banks are published in the newspapers stating that they are audited
without any reference to any audit qualifications, where there are such qualifications, it could mislead
the public. Therefore, banks should include a brief description of any audit qualifications when they
publish the audited accounts in the newspapers.
Further, I wish to inform you that banks are expected to publish their annual audited accounts
in newspapers within six months of the end of their financial year and their half yearly un-audited
accounts within three months of the end of the half-year.
Yours faithfully
Director of Bank Supervision


402 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Ref. Nos. :  02 / 04 / 002 / 0105  / 001
    &
 02 / 04 / 002 / 0151  / 001
Bank Supervision Department
8th Floor, Renuka Building
41, Janadhipathi Mawatha
Colombo 1.
20th March, 2001
To :  All Licensed Commer cial Banks and
 Licensed Sepcialised Banks
Dear Sir,
PUBLICATION OF CAPITAL ADEQUACY STATEMENT IN THE ANNUAL REPORT
 You may be aware that the CBSL guidelines permit consolidation of subsidiaries for the
purpose of computing capital adequacy ratios of banks but have not specified the nature of subsidiaries
to be consolidated. The CBSL is presently reviewing the policy on consolidation of subsidiaries by
banks for capital adequacy purposes.
 It  is observed that there had been no uniformity among banks in presenting the capital
adequacy statement in their Annual Reports. While few banks publish the statement on a ‘solo’ basis
others present it on a ‘consolidated’ basis.
 W ith a view to giving a true picture to the readers, it is recommended that the basis of
computation of the capital adequacy and the inclusion of non banking and non-financial subsidiaries
in the computation of the capital adequacy ratio, be disclosed as a footnote to the capital adequacy
statement, if published in the Annual Report of the bank.
Yours faithfully
P. T. Sirisena
Director of Bank Supervision


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  403
Bank Supervision Department
13 February 2006
To : The CEOs of all Licensed Commercial Banks
Dear Sirs,
SUBMISSION OF AUDITED FINANCIAL STATEMENTS BY BANKS
I wish to draw your attention to Section 38(1) and 38(2) of the Banking Act, No.30 of 1988 as
amended by the Banking (Amendment) Act, No.33 of 1995 and No.2 of 2005, in terms of which:
 1. All Licensed Commercial Banks (LCB) incorporated or established within Sri Lanka shall
transmit within five months after the close of its financial year to the Director of Bank
Supervision, its audited balance sheet as at the close of the financial year, and its profit
and loss account for such financial year in respect of its business in and outside Sri Lanka
including its off-shore banking business.
 2. All LCBs incorporated outside Sri Lanka shall transmit to the Director of Bank Supervision,
within five months after the close of its financial year, its audited balance sheet as at the
close of the financial year and its profit and loss account for such financial year in respect
of its business in Sri Lanka including its off-shore banking business.
You are kindly reminded to submit the audited financial statements for 2005, in the prescribed
format as per circular No. BS/38/90 of 02.06.98.
Your attention is also drawn to Section 30(2) of the Banking Act, in terms of which a copy of the
audited financial statements (OSBU) is required to be submitted. The above format should be used for
the submission of the OSBU accounts as well.
Accordingly, you are advised to transmit the annual audited financial statements for 2005 according
to the above requirements within the stipulated time frame.
Yours faithfully,
Sgd, Director of Bank Supervision


404 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Ref. Nos. :  02 / 17 / 800 / 0002  / 002
Bank Supervision Department
17 September, 2013
To :  CEOs of All Licensed Commercial Banks and
 Licensed Specialised Banks
Dear Sir/Madam,
PUBLICATION OF FINANCIAL STATEMENTS AND
 OTHER DISCLOSURES ON THE WEBSITES
 As intimated at the Chief Executive Officers meeting held on 28 August 2013, uniform and
adequate disclosure practices are important for improving market efficiency and promoting healthy
competition. In view of same and to further enhance transparency of banking operations and market
discipline, every bank shall ensure the following publication requirements on their respective websites.
Frequency Disclosure requirement
Annually   (i) Annua l Audited Report/Financial Statements and/or reports based on the require -
ments specified in,
(a) Circulars dated 02 June 1998 and 1 1 February 2013 issued on preparation
of annual audited accounts.
(b) Direction No. 3(8): “Disclosures” of the Banking Act, Directions No. 11
and 12 of 2007 on Corporate Governance.
(ii) In respect of branches of foreign banks, item (i)(b) above shall be in accordance
with the requirements specified in the Circular dated 03 January 201 1.
Bi-annually (i) Qualitative disclosures of the bank’s risk management as required under Direction
1.5 of Item H on Disclosure Requirements of the Guidelines issued under the
Banking Act, Directions No. 7 of 2011 on the Integrated Risk Management
Framework. Such publication in the website will be considered as compliance
with the respective requirements under the Banking Act, Directions No. 7 of
2011.
(ii) Banks may effect appropriate changes to the above requirements in accordance
with the Sri Lanka Financial Reporting Standards (SLFRS) and Sri Lanka Ac -
counting Standards (LKAS).
Quarterly Quarterly Financial Statements based on the requirements specified in Circulars


Quarterly Quarterly Financial Statements based on the requirements specified in Circulars
dated 30 September 2005, 26 January 2006, 21 February 2006 and 11 February 2013
issued on publication on quarterly financial statements in the press.
Accordingly, you are required to take necessary measures to comply with the above.
Yours faithfully
(Mrs.) T M J Y P Fernando
Director of Bank Supervision


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  405
Ref. No. : BS/38/90
Bank Supervision Department
Central Bank of Sri Lanka
8th Floor, Renuka Building
41, Janadhipathi Mawatha
Colombo 1.
20 May 1998
To :  All appr oved External Auditors
 of Licensed Commercial Banks
Dear Sir,
As you are aware, the Central Bank of Sri Lanka, as the supervisory authority for licensed
commercial banks and specialised banks in Sri Lanka, is charged with the responsibility of ensuring
that there is a great degree of consistency of bank audits and standard procedures which can be followed
by approved auditors. Accordingly, we enclose herewith a set of “Guidelines for External Auditors
relating to their statutory duties under Section 39 of the Banking Act, No.30 of 1988, as amended by
Banking Act, No.33 of 1995”.
Since your Firm is on the panel of approved auditors of the Central Bank, you are required to ensure
that the audit of licensed commercial banks/licensed specialised banks, are in conformity with these
guidelines, with effect from the financial year 1998.
Please note that wherever the expression “licensed commercial banks” appears in the guidelines,
it would also include “licensed specialised banks”.
Please acknowledge receipt of this letter and the enclosures.
Yours faithfully,
Sgd.  Y. A. Piyatissa
Director of Bank Supervision


406 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
GUIDELINES FOR EXTERNAL AUDITORS RELATING TO THEIR STATUTORY DUTIES
UNDER SECTION 39 OF THE BANKING ACT NO. 30 OF 1988
AS AMENDED BY BANKING ACT NO. 33 OF 1995
1. In terms of Section 39 of the Banking Act, the Central Bank of Sri Lanka, as the supervisory authority
for licensed commercial banks in Sri Lanka, is charged with the responsibility of ensuring that the
audits of banks are conducted satisfactorily. Accordingly, External Auditors of licensed commercial
banks in Sri Lanka are informed of the following guidelines which have been formulated in
recognition of the fact that Auditors are specially qualified to undertake :–
(a) The verification of prudential returns;
(b) The evaluation of control systems;
(c) The expression of opinions on provisioning policies; and
(d) The monitoring of the fiduciary activities of Banks.
2. The auditing guidelines envisaged by the Central Bank for the audit of licensed commercial banks
in Sri Lanka do not seek to provide an exhaustive listing of the procedures and practices to be used
in an audit. Rather, they seek to stress special audit considerations for instance concerning related
party transactions, or the risks they assume resulting from the use of electronic data processing and
electronic fund transfer systems connected to the specific characteristics of Banks. These guidelines
acknowledge the audit objectives which are of particular importance in relation to the typical items
in a Bank’s financial statement and encourage substantive audit procedures for the evaluation of loan
loss provisions, income recognition, etc . It is hoped that these guidelines will encourage a greater
degree of consistency in Bank audits and set standard procedures which can be followed by Auditors
in Sri Lanka.
3. W ith a view to ensuring that the interests of depositors are not at risk because of adverse changes in


the financial position or in the management or other resources of an institution, External Auditors,
in performing their statutory duties under the Banking Act and in recognizing the dependence of the
Central Bank on prudential returns and other information submitted by licensed commercial banks,
shall ensure :–
 (a) that the institution has not breached, or is in the process of currently breaching, or is likely to
breach, the capital ratio set by the Central Bank;
 (b) that the institution has not breached by a material amount for a significant period, or has been
frequently breaching by any amount, the liquidity ratio laid down by the Central Bank;
 (c) that the institution holds adequate provisions for bad and doubtful debts, expected losses on
contingents and tax liabilities, in accordance with accepted accounting standards;
 (d) that the accounting and other records and systems of control of the institution are commensurate
with the size and nature of business, or the way in which the business is structured, organized
and managed;
 (e) that the business, or a significant component of the business, is not effectively being directed or
has been directed for any period of time, by only one individual;
 (f) that there is evidence which calls into question the appropriateness of actions or decisions taken
by the management which are significant for prudential purposes.
4. In formulating these guidelines the Central Bank has recognized that in an industry environment
of high dependence on information technology, auditors should devote sufficient resources to
assess the soundness of the EDP processes which are vital to the institution’s operations and to the


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  407
effectiveness of internal EDP controls. External Auditors should accordingly, refer in their annual
management letters to any shortcomings and imperfections which have come to their attention in the
course of their examination of this specified field. The Central Bank recognizes that the risks which
characterize an EDP environment and the security and control procedures it requires are :–
(a) Improper disclosure of information;
(b) Error;
(c) Fraud;
(d) Interruption of business due to hardware or software failure;
(e) Inef fective planning and risks associated with end-user computing operations.
5. The Central Bank of Sri Lanka would also require auditors, under certain conditions, to discuss
with the supervisory authorities the activities of their banking clients. In doing so, the Central Bank
recognises that it is important that Auditors act in a manner that will preserve their professional
relationship with their client at all times. They would be therefore expected to draw the attention of
the Bank’s management immediately in certain situations, reference to which shall be contained in
their annual Management Letter. The situations envisaged in this regard are :–
 (a) Where it has come to the Auditor’s attention that there is an extreme situation, such as evidence
of imminent financial collapse;
 (b) Where the Auditor has evidence of an occurrence which has led or is likely to lead to a material
diminution of the institution’s assets;
 (c) W hen there appears to the Auditor to be a material contravention of one or more of the
provisions of the Banking Act or of the regulations, directives, or guidelines issued to licensed
commercial banks by the Central Bank;
 (d) When the Auditor forms the opinion that the management has reported financial information
to the Supervisor which is misleading or when he becomes aware that management has failed,


to the Supervisor which is misleading or when he becomes aware that management has failed,
does not intend to, report something and such failure to report is, or would be, materially
misleading; or
 (e) When the Auditor forms the opinion that there has been a significant failure of, or that there
is significant weakness in, the accounting and other records or internal control systems of the
institution.
6. The Central Bank believes that these guidelines would require Auditors to enlarge the scope of their
audit work. The Central Bank expects that only when Auditors become aware in the ordinary course
of their audit work of such an occurrence that they would expect them to make detailed enquiries
with the statutory provisions/directives/regulations/guidelines specifically in mind. These guidelines
do not cast an obligation on Auditors to seek out ground for making a report nor do they place an
obligation on them to conduct their work in such a way that there is reasonable certainty that they
will discover a breach of the criteria set out in these guidelines.
 Detailed operational guidelines to auditors are annexed.


408 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
OPERATIONAL GUIDELINES TO EXTERNAL AUDITORS RELATING
TO THEIR STATUTORY DUTIES UNDER SECTION 39 OF THE BANKING ACT NO. 30 OF 1988
AS AMENDED BY BANKING ACT NO. 33 OF 1995
1. These auditing guidelines on Bank audits are intended to assist the Auditors of Licensed commercial
banks in Sri Lanka to comply with generally accepted auditing standards when carrying out their
audit work and in preparing their report on the financial statements of Banks. These guidelines
are supplementary to and should be read in conjunction with the Sri Lanka Accounting Standards
Nos. 23 and 30 and any other relevant Standards referred to therein on the audit of licensed
commercial banks in Sri Lanka.
2. It is particularly important that Auditors of a Bank undertake an audit engagement only after
considering their own competence and the adequacy of their resources (including relevant experience)
to carry out their duties. In assessing their competence and, resources the Auditors should bear in
mind the type and range of the Banks activities and the nature of its systems. For example highly
specialized computer systems will require different skills from those necessary to evaluate manual
systems.
3. These guidelines have been drawn up in recognition of the fact that the maintenance of adequate
records and systems in a licensed commercial bank is of paramount importance and that an institution
cannot be regarded as conducting its business in a prudent manner unless it maintains adequate
accounting and other records as well as adequate systems of control of its business and records to
enable the business of the institution to be prudently managed and to comply with the duties imposed
on it by or under the statutes relevant to its operations.
4. These guidelines do not attempt to describe in detail the manner, in which a particular institution


should maintain its accounting and other records and internal control systems. Rather it emphasizes
the need to ensure that the scope and nature of the financial information which the accounting and
other records must be designed to capture, contain the required information.
Planning and Audit
5. When planning the audit of a Bank, Auditors are required to consider the following :–
 (a) The overall financial environment in which the Bank operates and its type of business;
 (b) The extent of computer systems and the reliance placed on these systems by the Bank;
 (c) The legal framework in which the Bank operates;
 (d) The audit risk involved, the assessment of which is crucial and should be undertaken very
carefully, particularly where the circumstances and management of the Bank indicate that the
engagement is likely to be high risk;
 (e) Key audit areas, in particular, individual areas where there is a high risk of material misstatement.
These should be identified at an early stage of audit to ensure that work is concentrated on this
area;
 (f) The adequacy and scope of the internal audit or inspection function;
 (g) The timing and nature of the audit work to be carried out;
 (h) The use of staf f with adequate training and experience.
6. Auditors should also consider the following additional matters when planning the audit :–
 (a) Compliance with the requirements of any guidelines issued by the CBSL;
 (b) Any formal communications between the CBSL and the Bank, including all correspondence,
minutes or notes of meetings relevant to the examination of the accounting and other records,
internal control systems and CBSL returns used for prudential purposes.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  409
Scope of Audit – Accounts and Other Records
7. The scope and nature of the accounting and other records which are required for the business of a
Bank to be conducted in a prudent manner should be commensurate with the manner in which the
business is structured, organized and managed, as well as the volume, nature and complexity of its
transactions and commitments. Auditors are thus required to ensure that the accounting and other
records of a Bank meet the following general requirements :–
 (a) capture and record on a timely basis and in an orderly fashion every transaction and commitment
which the institution enters into with sufficient information to explain :–
 (i)  its nature and purpose;
 (ii) any asset and/or liability, actual and contingent, which respectively arises or may arise
from it; and
 (iii) any income and/or expenditure, current and/or deferred which arises from it;
 (b) provide details, as appropriate, for each transaction and commitment, showing :–
 (i) the parties, including, in the case of a loan, advance or other credit exposure, whether
it is sub-participated and if so to whom it is sub-participated;
 (ii) the amount and currency;
 (iii) the contract, rollover , value and settlement or repayment dates;
 (iv) the contracted interest rates of an interest rate transaction or commitment;
 (v) the contracted exchange rate of a foreign exchange transaction or commitment;
 (vi) the contract ed commission or fees payable or receivable together with any other related
payment or receipt;
 (vii) the nature and current estimated value of any security for a loan or other exposure; the
physical location and documentary evidence of such security; and
 (viii) in the case of any borrowing, whether it is subordinated; if secured, the nature and book
value of any asset upon which it is secured;


value of any asset upon which it is secured;
 (c) m aintain the accounting and other records in such a manner that financial and business
information can be extracted promptly to enable management to :–
 (i) monitor the quality of the institution’s assets and safeguard them, including those held
as custodian;
 (ii) identify , quantify, control and manage its exposures by related counter-parties across
all products;
 (iii) i dentify, quantify, control and manage its exposures to liquidity risk and foreign
exchange and other market risks across all products;
 (iv) monitor the performance of all aspects of its business on an up-to-date basis; and
 (v) make timely and informed decisions;
 (d) c ontain details of exposure limits authorized by management which are appropriate to the
type, nature and volume of business undertaken. These limits should, where relevant, include
counterparty, industry sector, country, settlement liquidity, interest rate mismatch and securities
position limits as well as limits on the level of intra-day and overnight trading positions in
foreign exchange, futures, options, future (or forward) rate agreements (FRAs) and swaps;
provide information which can be summarized in such a way as to enable actual exposures to
be readily, accurately and regularly measured against these limits;
 (e) contain details of the factors considered, the analysis undertaken and the authorization or
rejection by management of a loan, advance or other credit exposure; and


410 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
 (f) provide on a memo randum basis details of every transaction entered into in the name of or
on behalf of another party on an agency or fiduciary (trustee) basis where it is agreed that the
institution itself is not legally or contractually bound by the transaction.
Internal Control Systems
8. A  system of internal controls in a Bank is deemed to be;
‘the whole system of controls, financial and otherwise, established by management in order to
carry on the business of the enterprise in an orderly and efficient manner, ensure adherence
to management policies, safeguard the assets and secure as far as possible the completeness
and accuracy of the records.’
9. In evaluati ng the adequacy of internal control systems in a bank, auditors are required to assess
the internal control systems only to the extent that they wish to place reliance on those systems in
arriving at their opinion as to whether the financial statements give a true and fair view. A careful
evaluation of these systems would include computer based accounting and information systems and
their relationship with the risk of material misstatement in the financial statements will be essential.
If the Auditors conclude that they can rely on the system of controls they may be able to limit the
level of substantive tests required to form their opinion on the financial statements.
10. For the purpose of identifying relevant controls, the principal activities of banks may be classified as
follows :–
 (a) loans, advances, trade finance and related income and expense;
 (b) customer accounts, cash, transfer of funds, nostro accounts and related income and expense;
 (c) inter bank deposits and related income and expense;
 (d) d ealing in foreign exchange, futures, options, commodities, bullion and related income,
expense, gains and losses;


expense, gains and losses;
 (e) investments, dealing securities and related income, expense, gains and losses; and
 (f) trustee and advisory activities (including portfolio management) and related income and
expense.
11. The overall audit objective should always be to ensure that the financial statements give a true and
fair view of the state of the Bank’s affairs at a given date and of the results for the year ended, and
comply with statutory and other relevant requirements.
12. Audit steps likely to be required to satisfy this overall objective, can be identified as follows :–
 (a) to determine the reliability of the bank’ s systems of internal control;
 (b) to ensure that all material balances exist, are complete, and are fairly stated at the balance sheet
date;
 (c) to ensure that all income and expenditure, gains and losses are properly accounted for;
 (d) to ascertain the recoverability and hence the realizability at the balance sheet date, of any loans,
investments and other related credit exposures;
 (e) in relation to trustee activities, to ascertain whether controls exist to give reasonable assurance
that the bank has fulfilled its fiduciary duties; and
 (f) to ensure that all material commitments and liabilities, contingent or otherwise, are identified,
provided for, or adequately disclosed in the financial statements.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  411
Automation
13. As a result of the large number of transactions undertaken and records held by banks and the need
for swift and accurate information processing and retrieval, many banking functions are often highly
automated, including : funds transfer systems, the accounting function, the processing and recording
of retail customer transactions, the dealing room and the supply of dealing and management
information.
14. The Auditors should assess the extent, nature and impact of automation within the bank and plan and
perform their work accordingly.
 (a) the required level of technical computer knowledge and skills is likely to be extensive and may
require the auditor to obtain advice and assistance from staff with specialist skills;
 (b) bank audits are particularly suitable for the use of audit software and other types of Computer
Assisted Audit Techniques; and
 (c) reliance on internal controls for audit purposes is likely to require the evaluation and testing
of general controls relating to the environment within which computer based systems are
developed, maintained and operated.
Branches
15. Many branches operate a network of branches. The Auditors’ approach to such branches will
principally be determined by the degree of Head Office control over the business and accounting
functions at each branch and by the scope and effectiveness of the bank’s inspection and/or internal
audit visits. The extent and impact of visits from regulators should also be considered. Where
branches maintain separate accounting records, the extent of audit visits and work on each branch
will also be dependent on the materiality of, and risks associated with, the operations of each branch
and the extent to which controls over branches are exercised centrally. Where the branch accounting
records are centralized, the auditors should obtain reasonable assurance that the systems of control


over branches are operating satisfactorily either by visiting branches, or by ensuring that an adequate
system of branch inspection by internal auditors exists. Particular attention should be paid both to the
difficulties of exercising Head Office control and to the differences in nature and degree of risk that
may arise in overseas branches. In the case of smaller branches, attention should focussed upon the
exceptions to a bank’s normal control procedures caused by staffing levels (e.g., the greater difficulty
of ensuring adequate segregation of duties) and to the consequent need for an increased level of
control from outside the branch.
Review of Financial Statements
16. When reviewing the financial statements of the Bank the Auditor should carry out such a review of
the financial statements as is sufficient, in conjunction with the conclusions drawn from the other
audit evidence obtained, to give him a reasonable basis for his opinion on the financial statements.
Such a review should include :–
 (a) Lar ge deposits or loan repayments received shortly before the year end which are repaid or
re-advanced shortly afterwards. This will require a good deal of judgement to identify any
window-dressing transactions;
 (b) T ransfers between the trading security and investment security portfolios which take advantage
of different valuation policies;
 (c) The reclassification of hedging and trading transaction/positions to take advantage of different
timing of profit and loss recognition;
 (d) The reclassification of assets within liquidity profiles or under balance sheets headings.


412 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
17. Auditors should consider whether the accounts comply with all relevant statutory requirements, and
whether the accounting policies adopted will enable them to express an unqualified opinion on the
financial statement, in respect of the following:–
 (a) loans, advances and trade finance;
 (b) customer accounts, cash, transfer of funds and NOSTRO accounts;
 (c) market deposits;
 (d) foreign exchange, futures, options and commodities dealings;
 (e) investments and dealing securities.
18. Auditors should ensure that the following controls are compliance tested :–
 (a) Segregation of duties wherever these controls are deemed necessary;
 (b) Physical controls wherever they are deemed necessary;
 (c) Authorization and approval wherever they are deemed necessary;
 (d) Arithmetical and accounting accuracy and controls where they are deemed necessary;
 (e) Supervision controls where they are deemed necessary;
 (f) Substantive tests to prove the adequacy of these controls.
19. Application and general control over the computer environment would entail :–
 (a) The or ganization of the relevant Bank departments.
 (b) Management review of activities.
 (c) Recompute processing of the transactions.
 (d) Input and processing of transactions by computer .
 (e) Maintenance of computer files of transactions and balances.
 (f) Post processing actions on output and computer systems.
 (g) Reconciliation of computerized records with related assets.
20. The general controls relating to the development, maintenance and operation of computer systems
that are designed to control the following risks :–
 (a) Risks arising in the development and enhancement of new computer systems;
 (b) Risks or errors during data processing, development and amendment to programmes;
 (c) Risks of loss including being unable to continue operation or recover from a breakdown or
disaster - business interruption;


disaster - business interruption;
 (d) Risks relating to unauthorized access to the computer system, its application and data files.
21. Other controls which af fect a number of areas :–
 (a) controls over the authorization and correct recording of :
 (i) nostro transactions; and
 (ii) transactions using funds transfer systems.
 (b) Control over financial planning and budgeting.
 (c) Controls governing the provision of adequate management accounting information.
 (d) Controls over the documentation and communication of :
 (i) accounting policies ; and
 (ii) operational procedures and controls.
 (e) controls over ef fective personnel selection routines.
 (f) Controls over establishing, monitoring and reporting risk.
 (g) Controls over management review of systems, e.g. internal audit.
 (h) Controls over communication with the CBSL  and other regulatory authorities.
 (i) Computer controls.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  413
Bank Supervision Department
27 April 2004
To :  All Approved External Auditors

Dear Sir,
GUIDELINES FOR EXTERNAL AUDITORS RELATING TO
THEIR STATUTORY DUTIES IN TERMS OF SECTION 39 OF
THE BANKING ACT NO. 30 OF 1988 AS AMENDED BY
THE BANKING ACT NO. 33 OF 1995
 The Central Bank of Sri Lanka as the Supervisory and regulatory authority of banking institutions
strives continually to mitigate and manage the attendant risks in the banking sector in Sri Lanka.
The CBSL recognizes the important role played by the External Audit firms in this regard and is working
towards improving the quality and the integrity of bank audits.
 Significant developments and changes have taken place in the global financial architecture
since the introduction of the first guidelines to External Auditors by the CBSL. As you are aware, the
Sarbanes-Oxley Act of the US has attempted to address some of these issues. Accordingly, the Monetary
Board of the Central Bank of Sri Lanka has approved the attached Addendum to the Guidelines issued
on 20 May 1998. The CBSL believes that these additional guidelines will address some of these concerns
and contribute towards the improvement of bank audits in Sri Lanka.
 Si nce your Firm is on the panel of approved auditors of the Central Bank, you are required to ensure
that your firm is in compliance with these guidelines, which are operative with immediate ef fect.
 Please acknowledge receipt of this letter .
Yours faithfully,
Director of Bank Supervision
Encl.


414 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Annex I
GUIDELINES FOR EXTERNAL AUDITORS RELATING TO THEIR STATUTORY DUTIES
IN TERMS OF SECTION 39 OF THE BANKING ACT NO. 30 OF 1988
AS AMENDED BY THE BANKING ACT NO. 33 OF 1995
ADDENDUM
Non-Audit Services
1. Qualified External Auditors shall not undertake any consultancy or other non-audit services with a
bank contemporaneously with the external audit. The restricted non-audit services are:
• Book keeping or other services related to the accounting records or financial statements of the audit
client;
• Financial information systems design and implementation;
• Appraisal or valuation services, fairness options, or contribution-in-kind reports;
• Actuarial services;
• Internal audit outsourcing services;
• Management functions, human resources and payroll services;
• Broker or dealer , investment adviser, or investment banking services; and
• Legal services and expert services related to the audit.
This restriction also applies to services provided by entities where a partner of an Audit Firm is a
Director or has a significant share holding.
Management Letter
2. External Audit firms are requested to submit the Management Letter, which is a non-statutory report by
the Auditor to the management of the Bank, together with the published audited accounts to the Banks
they audit, within five months of the end of the financial year. If the auditors are unable to finalize the
Management Letter, they should submit an interim report with their major findings within the said
period. This will enable the Banks and the Regulator to identify significant and systemically important
risks in a timely manner.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  415
Ref. No. : 02  / 03 /004 / 0006  / 001
Bank Supervision Department
15 October, 2012
To :  The CEOs of all Licensed Banks
SUBMISSION OF STATUTORY RETURNS
A review of the submission of Statutory Returns to the Bank Supervision Department has
revealed that several banks continue submission of some Statutory Returns in manual form which
have already been discontinued due to the following.
(a) Implementation of the web based off-site surveillance system from the reporting
period ending June 2009.
(b) Withdrawal of certain Circulars.
2. As intimated to you by our letter dated 28.03.2006, banks were requested only to
continue submission of Returns that are not replaced with web based Returns, in manual form.
However, it is noted that few banks do not follow these instructions and continue submitting
the same Returns both manually and as web based Returns.
3. Accordingly, we request you to ensure that only the Returns enumerated in Annex are sent
in manual form with effect from 01.11.2012 and to advise the respective officers accordingly.
Yours faithfully,
(Mrs.) T M J Y P Fernando
Director of Bank Supervision
Encl.


416 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Annex
Returns to be submitted manually
Return Reference Reporting
Period
1.Report of abandoned property -
settlements during the period
(Only  for LCBs)Banking Act Direction No. 05 of
2009 dated 02.09.2009Weekly
2.Cheque returns statement
(Only  for LCBs) Monthly
3.Donations received by Government,
Non-Government Organisations
(NGOs) and Others (Non-NGOs) –
Table 102/19/40110072/001 dated
07.03.2006Monthly
4.Donations received by NGOs –
Table 202/19/40110072/001 dated
07.03.2006Monthly
5.Utilization of investment fund account02/17/800/0014/02 dated
31.10.2011Monthly
(by e-mail)
6.Statements of certification of weekly,
monthly, quarterly and annual reports
approved/submitted Guidelines on Implementation
of the new web based off-
site surveillance system dated
28.07.2006Monthly,
quarterly and
annually
7.Information on shareholdings
(Only for domestically incorporated
private banks)  BD/CB/P dated 21.06.1996 Monthly
8.Statement of exposure to the stock
marketBanking Act Direction No. 05 &
06 of 2011 dated 26.08.2011Quarterly
(by e-mail)
9.Information on operation of banking
outlet 02/03/004/0200/002 dated
18.01.2012Quarterly
(by e-mail)
10. Report of internal loss events in banksExposure Draft on implementation
of the Standardised Approach
for calculating capital charge for
Operational Risk dated 22.06.2011Quarterly
11.Business operations that are/to be
outsourced
as at/during the yearBanking Act Direction No. 7 & 8
of 2010 dated 02.11.2010Annually
12.Report of abandoned property –
additions during the periodBanking Act Direction No. 05 of
2009 dated 02.09.2009 Annually *
13.Report of abandoned property –
settlements during the periodBanking Act Direction No. 05 of
2009 dated 02.09.2009Annually *
14.Return on depositor wise details of
eligible deposits Circular No. 02/2010 dated
09.12.2010Quarterly
15.Sri Lanka deposit insurance scheme –


09.12.2010Quarterly
15.Sri Lanka deposit insurance scheme –
payment of premium Circular No. 01/2010 dated
15.10.2010Quarterly
* Only for Lic ensed Commercial Banks which are unable to upload data to the web based returns
BSD-AF-18-AP – Report of Abandoned Property-Additions during the period and BSD-AF-18-AS –
Report of Abandoned Property-Settlements during the period are required to submit manually.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  417
Bank Supervision Department
28 July 2006
To : CEOs of all Licensed Commercial Banks
Dear Sirs,
IMPLEMENTATION OF THE NEW WEB BASED
OFF-SITE SURVEILLANCE SYSTEM
Further to our circular dated 17 March 2006 and the discussions at the meeting of the CEOs of
licensed banks held on 04.07.2006 and 22.06.2006, on the above subject, all licensed banks are hereby
informed that the submission of periodical returns in manual form will be discontinued from the reporting
period ending June 2006. The new ‘web-based returns’ will be implemented from the reporting period
commencing July 01, 2006. The lists of web-based returns are given in the Annex 1. Existing returns that
are not replaced with the web-based returns should continue to be submitted in manual form.
Banks are further informed that statement of certification relating to returns submitted on a weekly/
monthly, quarterly and annual basis should be submitted as specified in Annex 2, Annex 3, Annex 4 and
Annex 5, respectively, within 3 days from the end of the reporting period.
Yours faithfully,
Sgd, Director of Bank Supervision


418 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Weekly Returns
Interest Rates BSD-WF-13-IR – Interest Rates (“Bank Only” Totals)
Monthly Returns
Assets and Liabilities – DBU BSD-MF-01-BD – Balance Sheet (DBU and Bank Only Operations)
Assets and Liabilities – FCBU BSD-MF-01- BF – Balance Sheet (FCBU Operations)
Income and Expenditure – DBU  ( Note) BSD-MF-02-PD – Profit & Loss (DBU and Bank Only Operations)
Income & Expenditure – FCBU ( Note) BSD-MF-02- PF – Profit & Loss (FCBU Operations)
Classified Advances – DBU (Note) BSD-MF-03-CD – Classification of Loans & Advances
(DBU Operations)
Classified Advances – FCBU (Note) BSD-MF-03-CF – Classification of Loans & Advances
(FCBU Operations)
Statutory Liquid Assets – DBU BSD-MF-04-LD – Statutory Liquid Asset Ratio (DBU Operations)
Statutory Liquid Assets – FCBU BSD-MF-04- LF – Statutory Liquid Asset Ratio
(FCBU Operations)
Commercial Paper/Promissory Notes BSD-MF-16-CP – Commercial Papers/Promissory Notes
Overdue Export Credit
(DBU & FCBU)BSD-MF-17-CS – Overdue Export Credit
(Enhanced Interest Charge on Settlements)
BSD-MF-17-CO – Overdue Export Credit (Outstanding)
– BSD-MF-15-GE – Government Exposure
(“Bank Only” Totals) (New)
Quarterly Returns
Accommodation Granted to a Bank
Director and/or Close Relation  –
Domestic BanksBSD-QF-06-RC – Related Party Exposures (Accommodation Granted
by the Bank to Directors and/or Close Relatives – “Bank Only” Totals)
Accommodation Granted to Bank
Directors and Concerns where the
Director has a Substantial Interest  -
Domestic BanksBSD-QF-06-RS – Related Party Exposures (Accommodations Granted
by the Bank to Concerns where a Director of the Bank has a Substantial
Interest – “Bank Only” Totals)
Investments in Shares (Section 17A(1)
of the Banking Act, No.30 of 1988 as
amended by (Amendment) Act, No.33
of 1995)BSD-QF-07-IE – Investment in Equity
(“Bank Only” Totals)
Capital Adequacy - Solo BSD-QF-11-C1-C4 – Capital Adequacy


(“Bank Only” Totals)
Capital Adequacy - Solo BSD-QF-11-C1-C4 – Capital Adequacy
(“Bank Only” Solo Basis Totals)
Capital Adequacy - Consolidated BSD-QF-11-C5-C8 – Capital Adequacy
(Consolidated Totals)
Interest Spread BSD-QF-14-SP – Interest Spread
– BSD-QF-05-LN – Large Exposures
(Performing & Non Performing – “Bank Only” Totals) ( New)
– BSD-QF-08-FE – Foreign Currency Exposures
(DBU Operations Only) (New)Annex 1
The List of Returns implemented under New Web-based Off-site Surveillance System
Licensed Commercial Banks
Existing Manual Return New web-based Return to replace the Manual Return


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  419
– BSD-QF-09-GA – Maturity Gap Analysis (“Bank Only” Totals) ( New)
– BSD-QF-10-IS – Interest Rate Sensitivity (“Bank Only” Totals) ( New)
– BSD-QF-12-SC – Sector Wise Credit Exposures (“Bank Only” Totals)
(New)
Annual Returns – As per Audited
Accounts
Assets and Liabilities – DBU BSD-AF-01-BD – Balance Sheet (DBU and Bank Only Operations)
Assets and Liabilities – FCBU BSD-AF-01-BD & BF – Balance Sheet (FCBU Operations)
Income and Expenditure – DBU BSD-AF-02-PD – Profit & Loss (DBU and Bank Only Operations)
Income and Expenditure – FCBU BSD-AF-02-PF – Profit & Loss (FCBU Operations)
Capital Adequacy - Solo BSD-AF-11-C1-C4  – Capital Adequacy (“Bank Only” Solo Basis
Totals)
Capital Adequacy - Consolidated BSD-AF-11-C5-C8  – Capital Adequacy (Consolidated Totals)
Note: Frequency has been changed form quarterly to monthly.
 Annex 2
Statement 	of	Certification 	of	Weekly/Monthly 	Returns	Approved/Submitted
 Existing Manual Return New web-based Return to replace the Manual Return
Return Due DateSubmitted Approved
Date Yes No
Monthly Returns
BSD-MF-01-BD  – Balance Sheet - Domestic Banking Unit
Operations (DBU) and Bank15/MM/YY
BSD-MF-01-BF – Balance Sheet - Foreign Currency Banking
Unit Operations (FCBU)15/MM/YY
BSD-MF-02-PD  – Profit & Loss - Domestic Banking Unit
Operations (DBU) and Bank15/MM/YY
BSD-MF-02-PF – Profit & Loss - Foreign Currency Banking
Unit Operations (FCBU)15/MM/YY
BSD-MF-03-CD  – Classification of Loans & Advances -
Domestic Banking Unit Operations (DBU)15/MM/YY
BSD-MF-03-CF  – Classification of Loans & Advances -
Foreign Currency Banking Unit Operations (FCBU)15/MM/YY
BSD-MF-04-LD  – Statutory Liquid Asset Ratio - Domestic
Banking Unit Operations (DBU)15/MM/YY
BSD-MF-04-LF  – Statutory Liquid Asset Ratio - Foreign
Currency Banking Unit Operations (FCBU)15/MM/YY
BSD-MF-16-CP – Commercial Papers/Promissory Notes 15/MM/YY


BSD-MF-16-CP – Commercial Papers/Promissory Notes 15/MM/YY
BSD-MF-17-CS – Overdue Export Credit - Enhanced Interest
Charged on Settlement15/MM/YY
BSD-MF-17-CO – Overdue Export Credit - Outstanding 15/MM/YY
BSD-MF-15-GE – Government Exposure (New) 15/MM/YY
BSD-WF-13-IR – Interest Rates – 1st Week DD/MM/YY


420 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
BSD-WF-13-IR – Interest Rates – 2nd Week DD/MM/YY
BSD-WF-13-IR – Interest Rates – 3rd Week DD/MM/YY
BSD-WF-13-IR – Interest Rates – 4th Week DD/MM/YY
BSD-WF-13-IR – Interest Rates – 5th Week DD/MM/YY
We certify that the information contained in the above returns has been extracted from and is in
accordance with the books of accounts of the bank.
 (Name ) (Name )
 ……………………….  ………………………………………….
 (Sgd) Finance Controller  (Sgd) Compliance Officer/Administrator
 Date: DD/MM/YY  Date: DD/MM/YY
Annex 3
Statement 	of	Certification 	of	Quarterly 	Returns	Approved/Submitted
Quarterly Returns
BSD-QF-05-LN – Large Exposures ( New) 21/MM/YY
BSD-QF-06-RC – Related Party Exposures - Accommodation
granted by the Bank to Directors and/or Close Relatives 21/MM/YY
BSD-QF-06-RS – Related Party Exposures - Accommodation
Granted by the Bank to Concerns where a Director of the Bank
has a Substantial Interest21/MM/YY
BSD-QF-07-IE – Investment in Equity 21/MM/YY
BSD-QF-08-FE – Foreign Currency Exposures (New) 21/MM/YY
BSD-QF-09-GA – Maturity Gap Analysis ( New) 21/MM/YY
BSD-QF-10-IS – Interest Rate Sensitivity ( New) 21/MM/YY
BSD-QF-12-SC – Sector Wise Credit Exposures ( New) 21/MM/YY
BSD-QF-14-SP – Interest Spread 21/MM/YY

We certify that the information contained in the above returns has been extracted from and is in
accordance with the books of accounts of the bank.
 (Name ) (Name )
 ……………………….  ………………………………………….
 (Sgd) Finance Controller  (Sgd) Compliance Officer/Administrator
 Date: DD/MM/YY  Date: DD/MM/YYReturn Due DateSubmitted Approved
Date Yes No
Return Due DateSubmitted Approved
Date Yes No


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  421
Annex 4
Statement 	of	Certification 	of	Annual	Returns	Approved/Submitted

Annual Returns
BSD-AF-01-BD  – Balance Sheet (DBU and Bank Only
Operations)30/MM/YY
BSD-AF-01-BD & BF – Balance Sheet (FCBU Operations) 30/MM/YY
BSD-AF-02-PD  – Profit & Loss (DBU and Bank Only
Operations)30/MM/YY
BSD-AF-02-PF – Profit & Loss (FCBU Operations) 30/MM/YY
We certify that the information contained in the above returns has been extracted from and is in
accordance with the books of accounts of the bank.
 (Name ) (Name )
 ……………………….  ………………………………………….
 (Sgd) Finance Controller  (Sgd) Compliance Officer/Administrator
 Date: DD/MM/YY  Date: DD/MM/YY
Annex 5
Statement 	of	Certification 	of	Quarterly/Annual 	Returns	Approved/Submitted
(Only for Capital Adequacy)

Quarterly Returns
BSD-QF-11-C – Capital Adequacy – Bank Only (SOLO basis) 30/MM/YY
BSD-QF-11-C – Capital Adequacy – Consolidated 30/MM/YY

We certify that –
(1) The information submitted in the above return is, to the best of our knowledge and belief, correct;
(2) The capital adequacy ratio was, at any time during the quarter/year under review, not less than the
ratio determined by the Monetary Board, in terms of section 19(7)(a) of the Banking Act, No.30 of
1988 as amended by Banking Act, No.33 of 1995 and Act, No.2 of 2005.
 ……………………………………….  ……………………………..
 Chief Accountant  / Authorised Officer  Chief Executive
 ……………………………………….  ……………………………..
 Name   Name
 Date:………………………….  Date:………………………….Return Due DateSubmitted Approved
Date Yes NoReturn Due DateSubmitted Approved
Date Yes No


422 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
Bank Supervision Department
17 March 2006
To : CEOs of all Licensed Commercial Banks and
        all Licensed Specialised Banks
Dear Sirs,
NEW WEB-BASED OFF-SITE SURVEILLANCE SYSTEM
We refer to the discussion at the Bank Managers’ Meeting held on 26 January 2006 and the previous
correspondence on the above subject and write to inform you that the testing of, and familiarization with,
the above system with the use of information submitted by the banks for the month of September 2005,
through the web-based application, has been completed. The next step is to go “live” with the above
system and this exercise will start in parallel with the existing manual system till June 2006. Once the
system is fully tested, the existing manual returns submission system will be discontinued.
Therefore, we shall be thankful if you will make arrangements to forward the information in the
new returns, from January 2006 onwords, through the above web-based system, in addition to the present
system of “manual returns submission” to this Department. Your co-operation in this regard will be much
appreciated.
Yours faithfully,
Sgd, Director of Bank Supervision


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  423
Ref. No. : 02  / 04 / 004 / 0010  / 001
Bank Supervision Department
18 February 2005
To : The CEOs of all Licensed Commercial Banks and
 Licensed Specialised Banks
Dear Sirs,
SUBMISSION OF THE MONTHLY & QUARTERLY COMPLIANCE REPORTS
I refer to the BSD Circular dated 26 October 2001 and the discussion on the above subject at the
meeting of the CEOs of Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs)
held on 17.02.2005.
As agreed, all banks are hereby informed that the CEO of the respective bank should sign the
Compliance Reports submitted to this Department on a monthly and quarterly basis.
This will be effective for the Compliance Reports to be submitted for the month of February 2005
onwards.
Yours faithfully,
Sgd, Director of Bank Supervision
cc – Secretary-General/SLBA


424 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
BANKING ACT NO. 30 OF 1988
AS AMENDED BY BANKING (AMENDMENT) ACT NO. 33 OF 1995
Conditions determined, by the Monetary Board of the Central Bank of Sri Lanka, under section 83A
of the Banking Act No.30 of 1988 as amended by the Banking (Amendment) Act No.33 of 1995 relating
to business of pawn broking.
Sgd. A. S. Jayawardena
Governor
Colombo
07 September 1998
LICENSED COMMERCIAL BANKS (PAWNING) CONDITIONS 1998
1. ( 1)  T hese Conditions may be cited as the Licensed
Commercial Banks & (Pawning) Conditions, 1998
 (2) These Conditions shall apply to the business of pawn
broking, (hereafter referred to as pawning) carried on by a licensed
commercial bank or any branch or agency of such bank (hereafter
referred to as the “pawnee”).
2. In these Conditions, “pawning” means the lending of money
on the security of personal articles made of gold (hereafter referred to as
the “article”) accepted as a pledge for a period not exceeding an initial
period of 12 months.
3. (1) A  pawnee shall not accept an article as a pledge where
the pawnee has reasonable grounds to believe that the person who gives
the article as a pledge is not the owner or the authorised agent of the
article.
 (2) A person who gives an article as a pledge or redeems an
article shall establish the identity of the person to the satisfaction of the
pawnee.
4. Pawning shall be carried on by a pawnee –
 (a) between the opening and closing hours of business for
the public in its capacity as a licensed commercial bank;
and
 (b) on such other dates and times as may be specified in a
notice displayed in a conspicuous place at the place of
business of the pawnee.
5. A  pawnee shall, for the purpose of testing and valuing articles
for pawning, have staff with sufficient training and competency in and


for pawning, have staff with sufficient training and competency in and
the equipment for assaying the gold content of an article.Citation & Application.
Interpretation.
Ownership of pledge.
Dates & Times of Pawning.
Competence of Staff and
equipment.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  425
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
6. (1) The standard measurement for the determination of the
quality of an article shall be a carat.
 ( 2)  T he standard measurement of weight used in the
valuation of an article shall be a gram.
 ( 3)  An a rticle measuring less than 9 carats shall not be
accepted as a pledge.
 (4) In valuing an article , the pawnee shall have regard only
to the value of gold in the article.
 ( 5)  A  pawnee shall, in accepting an article as a pledge,
inform the person delivering the article, the value of the article
determined in accordance with this paragraph.
7. (1) The rate of interest chargeable on the money lent on the
security of an article accepted as a pledge for pawning shall be fixed by
the pawnee.
 ( 2)  A pawnee shall display in a conspicuous place in its
place of business a notice specifying –
 (a) the daily market value of sovereign gold;
 (b) the rate or rates of interest fixed under subparagraph
(1) or subparagraph (3).
 (c) The maximum percentage of the value of an
article lent on each carat of the article.
 (3) Where an article given as a pledge for pawning is not
redeemed within the redeemable period calculated under paragraph 11, a
pawnee may, subject to paragraph 10(2), levy interest on the money lent
at a rate higher than the rate levied during the redeemable period, (such
higher rate referred to as “enhanced interest”) from the date immediately
following the redeemable period.
8. (1) A  pawnee shall keep for its business –
 (a) a pledge book in the Form set out in the First
Schedule;
 (b) a sale book of pledges in the Form set out in the
Second Schedule.
 (2) A pawnee shall, after due inquiry, enter in each book
kept under the subparagraph (1), the particulars specified therein in
respect of each article taken as  a pledge.
9. ( 1)  Subject to s ubparagraph (6), a pawnee shall execute,


9. ( 1)  Subject to s ubparagraph (6), a pawnee shall execute,
in respect of every article accepted as a pledge for pawning, a pawn
ticket.
 (2) A pawn ticket shall be in foil and counterfoil and  shall
be in the Form set out in the Third Schedule.Interest Rates.
Books to be maintained.
Pawn Ticket.Standard Measurement.


426 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
 (3) The counterfoil of the pawn ticket shall, after its is filled
up by the pawnee, be signed by the person giving the article as a pledge
(hereafter referred to as the “pawner”) or, if the pawner is unable to sign
the name, be marked with the left thumb impression of the pawner.
 (4) The foil of the pawn ticket shall be filled up and signed
by the pawnee.
 (5) The pawnee shall, after compliance with sub paragraph
(4), hand over the foil of the pawn ticket to the pawner.
 (6) When a pawner gives more than one article as pledge on
the same occasion, the pawnee may execute one pawn ticket for all such
articles, unless the pawner requests otherwise.
10. (1) Where an article is redeemed within the first fourteen
days of a month, the interest chargeable for that month shall be one half
interest chargeable for that month.
 ( 2)  Where the business of a pawnee remains closed on
the last date of the redeemable period without reasonable and adequate
notice, enhanced interest may be levied only from the day immediately
succeeding the first day on which the business thereafter remains open.
11. ( 1)  Every article given as a pledge shall be redeemable
within a period of 12 months commencing from the date of pawning (in
these Conditions referred to as the “redeemable period”).
 (2) In calculating the period of 12 months under subparagraph
(1) the date of pawning shall be disregarded.
12. ( 1)  Subj ect to the other provisions of this paragraph, a
pawner may redeem an article given as a pledge, by delivering to the
pawnee the foil of the pawn ticket in relation to that article and by
placing the signature or the left thumb imprint, as the case may be, of the
pawner on the foil in the presence of the pawnee or an authorised agent
or employee of the pawnee.
 ( 2)  A person authorised in writing by the pawner may


or employee of the pawnee.
 ( 2)  A person authorised in writing by the pawner may
redeem an article given as a pledge by delivering to the pawnee the
foil of the pawn ticket in relation to the article, duly endorsed by the
signature or the left thumb imprint of the pawner and by placing on the
foil the person’s signature or left thumb impression in the presence of
the pawnee or an authorised agent or employee of the pawnee.
 (3) Where by reason of the death or disability of the pawner,
an article given as a pledge cannot be redeemed under subparagraph (1)
or subparagraph (2), a holder of the foil of the pawn ticket in relation to
the article may redeem the article by delivering to the pawnee the foil
together with a declaration in the form set out in the Fourth Schedule
signed by the holder and by a person identifying the holder and made
before a Justice of Peace.Computation of Interest.
Redeemable period.
Procedure for redemption of a
pledge.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  427
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
 (4) Where a foil in relation to an article given as a pledge
is lost, stolen, mislaid, destroyed or has been obtained by a person
not entitled to it, the pawner, the person or the holder referred to in
subparagraphs (1), (2), or (3) may redeem the article by making a
declaration in the Form set out in the Fifth Schedule signed by the
pawner, person or holder, as the case may be, and a person identifying
the pawner, person or holder and made before a Justice of the Peace and
in that event the pawner, person or holder, as the case may be, shall place
the signature or the left thumb impression on the counterfoil of the pawn
ticket in the presence of the pawnee, or an authorised agent or employee
of the pawnee.
 (5) Subject to subparagraphs (1), (2),(3) and (4) the pawnee
of an article given as a pledge shall, on payment of the money lent on the
security of the article together with the interest due thereon by the person
entitled to redeem the article under those subparagraphs, deliver, subject
to subparagraph (6), the article to such person.
 (6) Where a pawnee has reasonable grounds to believe that
a person delivering a foil of a pawn ticket under subparagraphs (1), (2) or
(3) has stolen or otherwise illegally obtained possession of it, the pawnee
may refuse to deliver the article in relation to that foil.
 (7) The pawnee shall in delivering under subparagraph (4)
an article given as a pledge, issue to the person redeeming the article a
receipt for the money paid in the Form set out in the Sixth Schedule.
13. (1) Where an article given as a pledge is lost, destroyed or
damaged while in the custody of the pawnee, the pawnee shall be liable,
on demand by a person entitled to redeem it within the redeemable
period, to pay the person the value of the article determined under


period, to pay the person the value of the article determined under
paragraph 6 less any sum due as money lent and interest thereon.
 (2) Every pawnee shall insure the business of pawn broking
to the value of the articles taken as pledges.
14. Every pawnee shall retain in the possession of the pawnee  –
 (a) the counterfoil of each pawn ticket for a period of
12 months from the date of redemption of the article
relating that pawn ticket or, when the article is sold
under paragraph 15 from the date of sale.
 (b) foil of every such pawn ticket referred to in paragraph
(a) for a period of 12 month from the date of redemption
where the foil is delivered to the pawnee;
 (c) each declaration made under paragraph 12 for a period
of 12 months from date of redemption of the article in
respect of which the declaration is made.
 (d) the duplicate copy of the receipt issued under paragraph
12 (7) for a period of 12 months from the date of issue
of the receipt.Loss or destruction of pledge.
Period of retention of documents.


428 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
15. (1) Where an article delivered as a pledge is not redeemed
within the redeemable period calculated under paragraph 11, a pawnee
may sell the article by public auction and the provisions of this paragraph
and the Seventh Schedule shall apply to such sale.
 ( 2)  The auctioneer at a public auction conducted under
subparagraph (1) shall be a senior officer of the pawnee of a rank not
below the rank of a Branch Manager.
 (3) A pawnee shall give to each pawner of an article liable
for sale under subparagraph (1) not less than 14 days notice of the
auction.
 (4) The notice under subparagrah (3) shall state the date,
time and place of the auction and shall be sent to the pawner by registered
post to the address stated in the pledge book and the cost of such postage
shall be borne by the pawner.
 (5) Where a notice sent by registered post to a pawner is
returned undelivered to the pawnee, the notice of the auction published
pursuant to the Seventh Schedule shall be a sufficient notice to the
pawner.
 ( 6)  A pawnee may bid for and purchase at an auction
conducted under subparagraph (1) an article delivered to the pawnee
as a pledge and liable to be sold under that subparagraph and on such
purchase shall be deemed to be the absolute owner of the article.
 (7) Where at an auction conducted under subparagraph (1)
an article is sold for an amount exceeding the money lent on the security
of that article together with interest thereon, the pawnee shall –
 (a) forthwith give notice to the pawner of that article by
registered post to the address stated in the pledge book
of the amount for which the article was sold and of the
amount lying to the credit of the pawner after deducting
the cost of postage and the charges of the auction;
 (b) on demand made by the pawner within 12 months from


(b) on demand made by the pawner within 12 months from
the date of dispatch of the notice, pay to the pawner the
sum lying to the pawner’s credit;
 (c) i f no demand is made within the period specified in
clause (b) above, deposit forthwith after the expiration
of that period such amount in a savings account opened
in the name of the pawner or transfer the said amount
to an un claimed balance account maintained by the
pawnee.
 (8) A pawnee shall keep proper records of the unclaimed
balance account maintained under subparagraph (7)( c) and pay to the
pawner the amount due to the pawner if a claim is made thereto by the
pawner.Sale of Pledges.


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  429
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
Rules.16. A  pawnee shall at the end of every quarter carry a physical
check to be made of the articles delivered as pledges and held in stock
by the pawnee.
17. A  pawnee shall not –
 (a) accept an article as a pledge from any person appearing
to be under the age of 16 years or to be under the
influence of alcohol;
 (b) accept an article as a pledge without giving the pawner
of the article the foil of the pawn ticket;
 (c) purchase or take as security or exchange the foil of a
pawn ticket issued by another pawnee;
 (d) purchase any article given to the pawnee as a pledge
except at a public auction conducted under paragraph
15;
 (e) allow any article delivered as a pledge to be redeemed
with the view to purchasing it by the pawnee;
 (f) a gree with the pawner to purchase, sell, or dispose
within the redeemable period an article delivered by
the pawner as a pledge;
 (g) sel l or otherwise dispose of an article delivered as a
pledge except at such time and in such manner as is
authorised under these Conditions.
 (h) m ake any false entry in a pledge book or any other
document required to be kept under these Conditions
or fail to make therein any entry required to be entered
under these Conditions.
18. (1) A  pawnee shall be responsible for the safe custody of
articles delivered as pledges.
 ( 2)  Articles delivered to a pawnee as pledges shall be
placed –
 (a) In safes which are under dual control;
  or
 (b) In steel cabinets under dual control kept inside a
vault.
 (3) A pawnee shall establish a dual control team of which
the Head of the pawning division shall be a member.
19. (1) A  pawnee may formulate rules which are not inconsistent
with these Conditions for the conduct of its pawn broking business.
 ( 2)  A pawnee shall forward to the Director of the Bank


( 2)  A pawnee shall forward to the Director of the Bank
Supervision Department of the Central Bank a copy of the rules
formulated under paragraph (1) and display a copy of those rules in a
conspicuous place at its place of business.Physical check of pledges.
Safe custody of articles.Acts prohibited.


430 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
 [ PARAGRAPH 8 ]  First Schedule
PLEDGE BOOK
Pledge Book of  ......................................................  Pawnee of ...................................................................
Serial
No. of
pledge  in
the monthDate No. of
the Issued
Pawn
TicketName
of
PawnerAddress*
of
PawnerName
of Owner if
other than
PawnerDescription
of each Article
Pawned
 [ PARAGRAPH 8 ]  Second Schedule
 SALE BOOK OF PLEDGES
Date and Place of Sale : ................................................................................................................................
Name and Address of Auctioneer : ...............................................................................................................Weight of
Article if
JewelleryValue of each
Article in term
of
 para (6)
(Rs. cts.)Amount of
Loan upon
each Article
(Rs. cts.)Profit or
interest
charged upon
each Article
(Rs. cts.)Name &
Address
of
Person
redeemingDate
of
redemption
* New address if original is changed
Date
of
PawningNo. of
pledge as in
pledge
BookName
of
PawnerAmount
of
LoanAmount
of
Interest
dueAmount for
which each
Pledge was Sold
by AuctioneerName &
Address of
Purchaser


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  431
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
[ PARAGRAPH 9 ]  Third Schedule
PAWN TICKET
Counterfoil  No. ……………
(To be retained by Pawnee)
Date : ………
Name and address of pawnee
…………………………………………………
…………………………………………………
I, the undersigned, …………………… of
(*address of pawner) ………………………
have this day pawned with the aforesaid
pawnee……………………………… worth
Rs. ………………………………………… for
Rs. ……………………………
(Value as determined in terms of para (6) of the
condition)
Signature of pawner, or
Left thumb impression of
Pawner if unable to write
Name.
Signature of pawnee
Foil.  No. ………………Date : …………
…………………………………………………
……………………………………………
(name and *address of pawner) has
this day pawned with the undersigned
……………………………………………
(name and address of pawnee) worth
Rs………………………………………… for
Rs. ……………………………
(Value as determined in terms of para (6) of the
condition)
Signature of Pawnee
Signature of Pawner or
left thumb impression
Pawner agrees
1) w here an article delivered as a pledge is
not redeemable within the redeemable
period calculated under paragraph 11 of
the condition under paragraph 11 of the
conditions of pawning, a pawnee may sell
the article by public auction.
2) wh ere a notice sent by registered post to
a pawner is returned undelivered to the
pawnee, the notice of auction published in
the newspapers shall be sufficient notice to
the pawner.* Change of address to be notified


432 Directions, Determinations, and Circulars issued to Licensed Commercial Banks
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
[ PARAGRAPH 12 ]  4th Schedule
DECLARATION WHERE THE FOIL OF THE PAWN TICKET IS SURRENDERED
WITHOUT THE SIGNATURE
OF THE PAWNER ENDORSED THEREON
I,  A.  B.,  …………………………… , of ………………………………………… , do solemnly  and
sincerely  declare  that  …………………………………… pledged  at ……………………………,
Pawnee,  the  article/s  described  below  and received  the  foil  of a pawn ticket for the same and that  for
the  purpose  of redeeming  the pledge I am unable to surrender the foil of the pawn ticket to the pawnee
with the signature of the said .……….........
(pawner) duly endorsed thereon, because the said  ………………………………………………
(pawner) is dead/under a disability, to wit  ………………………………………………
(nature of  disability).
The article/s above referred to is/are …………………………………………………………………
I,  C. D., ………………………… do solemnly and sincerely declare that I know the  person  now making
the  foregoing declaration to be A. B., of …………………………………
Declared before me this ……………………… day of ……………………………………, 19………
Signature of A. B.,  ………………………………
Signature of C. D.,  ………………………………
……………………
Justice of Peace
[ PARAGRAPH 12 ]  5th Schedule
DECLARATION WHERE THE FOIL OF THE PAWN TICKET IS LOST &C.
Take notice, if this declaration is false the person making it is punishable.
I,  A.  B.,  ……………………………………… , of ………………………………… , do solemnly  and
sincerely  declare  that  …………………………………… pledged  at …………………………, Pawnee,
the  article (or articles)  described  below, …………………………………………………, property,
and   received   the   foil  of  the  pawn  ticket  for  the   same,   which   has   since been  ……………,
by ……………,  and that the foil of the pawn ticket has not  been  sold  or transferred to any person by
…………… to  ……………knowledge or belief.
The article (or articles) above referred to is (or are) the following : .....…………….....


The article (or articles) above referred to is (or are) the following : .....…………….....
And, I,  C. D., ……………………… do solemnly and sincerely declare that I know the  person  now
making the  foregoing declaration to be A. B.,  of …………………………………
Declared before me this ……………………… day of ……………………………………, 19………
……………………
Justice of Peace


Directions, Determinations, and Circulars issued to Licensed Commercial Banks  433
LCB - 30 Nov 2013 (5th Final Proof) - 29/11/2013
[ PARAGRAPH 12 ]  6th Schedule
RECEIPT NO.
Date : …………
Received on redemption of Pledge No. ………………………
Rs.   Cts.
       Amount of loan
       Profit or interest
Total
                                                      ==============
……………………
Signature of Pawnee
[ PARAGRAPH 15 ]  7th Schedule
REGULATIONS RELATING TO AUCTIONS OF PLEDGES
1. The pawnee shall cause all pledges to be exposed to public view .
2. The pawnee shall display catalogues of the pledges, stating –
 (a) the pawnee’ s name and place of business;
 (b) the month in which each pledge was pawned;
 (c) the number of each pledge as entered at the time of pawning in the pledge book.
3. The pledges of each pawnee in the catalogue shall be separate from any pledges of  any other pawnee.
4. The auctioneer shall insert in a daily newspaper in all three  languages an  advertisement giving
notice of the sale, and stating –
   (a) the pawnee’ s name and place of business;
   (b) the months in which the pledges were pawned;
   (c) the place of auction;
   (d) the date and time of auction.
5. The  advertisement shall be inserted on two separate days  in  the same  newspaper,  and  the second
advertisement shall be  inserted at least ten clear days before the first day of sale.
6. Where  a pawnee bids at a sale, the auctioneer shall not take  the bidding  in  any   other  form than that
in  which  he  takes  the biddings of other persons at the same sale; and the auctioneer  on knocking
down  any article to a pawnee  shall  forthwith  declare audibly the name of the pawnee as purchaser.
7. The auctioneer shall, within fourteen days after the sale, deliver to the pawnee a copy of the catalogue,
or of so much thereof  as relates  to the pledges of that pawnee, filled up with the  amount for  which


the  several pledges of that  pawnee  were  sold,  and authenticated by the signature of the auctioneer.
8. The  pawnee shall preserve every such catalogue for two  years  at least after the date of the auction.