REGULATORY FRAMEWORK OF CENTRAL BANK OF SRI LANKA

-

Importance of Supervision of Banks and Their Regulatory Framework

In present, banking sector of Sri Lanka is regulated by the Monetary Law Act No.58 of 1949 The Act is established by the Central Bank to administer and regulate the system and to confer and impose upon the Monetary Board of the Central Bank powers, functions and responsibilities necessary for the purpose of such administration and regulation.
And also the Banking Act No.30 of 1998 has established to provide for the introduction and operation of a procedure for the licensing of persons carrying on banking business, for the regulation and control of matters relating to the banks.
Regulation of banks is required to protect the public against mismanagement, bank failures and loss of confidence in the banking system. Bankers’ failures can have broader ramification hurting customers, other banks, the community and the market as a whole. To protect depositors and stock-holders CBSL has established several regulatory departments to overcome from this economic downfalls.

Bank Supervision Department (BSD)
The BSD is one of the two main departments, established in 1950 under section 28 of Monetary Law Act No.58 of 1949 at the inception of the Central Bank of Sri Lanka. It is used to carryout continuous supervision and periodical examination of all banking institutions in Sri Lanka.
The structure of the Bank Supervision Department is,
  • Banking policy division
  • Continuous supervision division
  • Examination division

Banking Policy Division (PD)
The PD plays an important role in drafting and issuing prudential regulations to banks in order to ensure stability of the banking sector in Sri Lanka. The prudential regulations are used based on,
§  Statutory provisions
§  Basel core principles of the Basel committee on Banking Supervision
§  Local and international regulatory developments
§  International best practices adopted by the other international regulators and markets.


Continuous Supervision Division (CSD)
The CSD monitors the financial conditions of banks and Non-bank associations on a continuous basis,
§  Through web based statutory returns submitted by banks on a weekly, monthly and quarterly basis
§  Regulatory Approvals
§  Submission of Off Site Surveillance Reports (OSSR) to Senior Management and the Monetary Board
Examination Division
In terms of the provisions of the Banking Act and the Monetary Law Act, all banks are subjected to statutory examinations. The examinations are conducted focusing mainly on preserving sustainability and efficiency of the banks.

Comments

Post a Comment

Popular posts from this blog

MARKETING STRATEGIES USED BY HNB

-
HNB Savings Plus Normally other banks give around maximum 6% interest rate for normal savings accounts for their customers. Although HNB has offered a savings account named HNB SAVINGS PLUS as a general deposit which pays a 7.5% interest rate for the customers. Compared to other commercial banks, it is the bank deposit which pays the highest interest rate for a saving account in the market. HNB is offered many benefits for the customers via the savings plus account. They are, ·          Free Shopping Debit Card ·          Free Internet Banking and Mobile Banking facility ·          Free SMS notifications ·          Unlimited withdrawals ·          Cash backed facilities of up to 90% of the deposit As per the benefits and this attractive interest rate of this savings account, it can be considered as a marketing strategy which is used by HNB to attract customers and to compete with other banks.
Read more

HNB FIT ACCOUNT

-
HNB Fit is an online application that promotes fitness and health among customers while rewarding with increased financial benefits. It will make users’ every step count and get his HNB account credited for each step that keeps every day. HNB Fit which has integrated with top three fitness brands, Apple, Fitbit and Jowbone and that is synced with these smart watches and measures how many steps have taken. Then it will be offered an increased interest for each day, a maximum of 10% for 10,000 steps.
Read more

FINANCIAL SYSTEM IN SRI LANKA

-
Image
A financial system is a system that allows the exchange of funds between lenders and borrowers. Every financial system operates at national and global levels of an economy. They consist of complex and closely related services, markets and institutions intended to provide an efficient and regular linkage between investors and depositors.   The financial system of a country includes various units which relates to the payment system of that country through money transactions. Therefore, financial development of a country depends on the development of the money and money transactions of that country. Components of a Financial System                                                     Functioning of a financial system in a country is reflected by some sections of an economy. Those are, ·          Circulation of Money and Central Bank ·          Financial Instruments and Financial Markets ·          Financial Institutions ·          Payments and Settlements Systems
Read more