Regulatory Alerts2020-10-28 | Circular No.09 of 2020Amendments to Circular No. 04 of 2018 on Guidelines to Licensed Banks on the Adoption of Sri Lanka Accounting Standards – SLFRS 9: Financial Instruments
The Central Bank of Sri Lanka issued Circular No. 09 of 2020 to amend its 2018 SLFRS 9 guidelines for licensed banks, granting case-by-case staging flexibility for facilities directly restricted by the pandemic. The circular mandates board-approved loan staging policies, requires the use of official or credible alternative forecasts for credit provisioning models, and clarifies judgment criteria for restructured loans exceeding two refinements. Furthermore, licensed banks must consult auditors for foreign currency sovereign probability of default calculations while retaining existing loss given default rules to ensure consistent impairment accounting.
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