Sri Lanka will enact a new banking act in 2021

COLOMBO (News 1st) - The Central Bank of Sri Lanka announced its road map for monetary and financial sector policies for 2020, this morning. The 13th road map of the Central Bank was delivered by the Governor of the Central Bank, Professor W.D.Lakshman. During the presentation, the Governor noted that inflation during the year 2020 is expected to be between 4-6% Professor W.D.Lakshman, Governor CBSL "The developments in the past few years have shown that at times there was a trade-off between macroeconomic stability and economic growth. While stability is important the people-centric government cannot ignore its social and human development object especially when Sri Lanka is ready for its economic take-off." During his address, Governor Professor W.D.Lakshman said Sri Lanka will enact a new Banking Act in 2021. He said regulations will also be introduced to supervise banks being set up in the Colombo International Financial Centre, which will be situated in the Chinese built Colombo Port City, which recently completed land reclamation. Professor W.D.Lakshman, Governor, CBSL: "The CBSL intends to set up a task force with the participation of the relevant stakeholders to introduce appropriate cost-reflective benchmark interest rate for pricing loan products. We believe that this measure will improve the healthy competition among banks while supporting efficient transmission of monetary policy measures. In line with envisaged low inflation environment we expect to ensure reasonably low nominal interest rates over the medium term to boost domestic activity, however, we understand that low nominal interest rates could affect fixed income earners particularly senior citizens in this fast-ageing society. In this regard, we encourage banking and other financial institutions to develop new financial products to suit the needs of such affected segments of the population." The Governor noted that the CBSL, being the custodian of the Employee's Provident Fund, the largest superannuation fund in Sri Lanka continued to effectively carry out its fund management activity. He added that during 2019 the secondary market transaction in government securities and investment activities in the equity market was recommenced. Professor W.D.Lakshman, Governor of CBSL: "The Central Bank has also undertaken several upgrades to the analytic and monitoring methods, for micro and macro provincial regulations to ensure that they are on par with global standard practice. These include the adoption of the rating system and early warning system, to identify high-risk financial institutions, with a view to taking preemptive measures when necessary. During 2019 the Central Bank continued to take measures to strengthen the payment and settlements infrastructure through modern technology. Financial institutions and Central Bank have already invested significantly to enhance the use of the innovative systems of digital payment settlement. It is expected that the general public will increasingly make use of these more efficient methods of payment." The governor also said the Central Bank has revisited certain provisions of the foreign exchange act No.12 of 2017 and proposed amendments to the provisions of the foreign exchange act would be completed by early 2020. The Central Bank is currently in the process of introducing an international transaction reporting system, a comprehensive monitoring system of cross border transaction and foreign currency transactions through the banking system.