Regulatory Alerts2016-10-27 | Direction No. 2 of 2016Central Bank of Sri Lanka Microfinance Act Directions No. 02 of 2016 on Statutory Reserve
The Central Bank of Sri Lanka issued Directions No. 02 of 2016 under the Microfinance Act to mandate Licensed Microfinance Companies to maintain a statutory reserve. These directions require companies to transfer at least 5% of annual net profits to the reserve until it reaches 50% of stated capital, followed by a further 2.5% transfer until the reserve equals the full stated capital. The directive defines stated capital according to the Companies Act and establishes the legal framework for capital adequacy within the microfinance sector.
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