Regulatory Alerts2026-05-27 | Banking Act Direction No. 02 of 2026Amendments to Basel III Capital Requirements Directions for Licensed Commercial and Specialised Banks
The Central Bank of Sri Lanka has amended its Basel III capital requirements directions for licensed commercial and specialised banks, effective 1 September 2026. The updated schedule establishes tiered risk weights for gold-secured claims based on loan-to-value ratios, assigning ten percent to loans with ratios of 70 percent or less, forty percent to those between 70 and 100 percent, and one hundred percent to loans exceeding 100 percent. Licensed banks must apply these revised risk weights when computing their risk-weighted amounts for credit risk under the updated web-based return codes.
CENTRAL BANK OF SRI LANKA 27 May 2026 BANKING ACT DIRECTIONS No. 02 of 2026
AMENDMENTS TO DIRECTIONS ON CAPITAL REQUIREMENTS UNDER BASEL III FOR LICENSED COMMERCIAL BANKS AND LICENSED SPECIALISED BANKS
Banking Act Directions No. 01 of 2016 on Capital Requirements under Basel III for licensed commercial banks and licensed specialised banks are hereby amended by replacing the following Directions, with effect from 01.09.2026.
SCHEDULE I Appendix IV PART III(A): COMPUTATION OF RISK WEIGHTED AMOUNT FOR CREDIT RISK
| Web Based Return Code | Assets | Risk Weight (%) |
|---|---|---|
| 20.3.1.8.3.0 | Claims Secured by Gold The amount must agree with the sum of the following items from Web Based Return Code (WBRC) 20.3.1.8.3.1 to 20.3.1.8.3.3 | |
| 20.3.1.8.3.1 | Loan to Value Ratio equal to or less than 70% Total value of claims collateralized by gold with a loan to value ratio of equal to or less than 70% at the reporting date. | 10 |
| 20.3.1.8.3.2 | Loan to Value Ratio over 70% and up to 100% Total value of claims collateralized by gold with a loan to value ratio of over 70% and up to 100% at the reporting date. | 40 |
| 20.3.1.8.3.3 | Loan to Value Ratio over 100% Total value of claims collateralized by gold with a loan to value ratio of over 100% at the reporting date. | 100 |
Signature Dr. P Nandalal Weerasinghe Chairman of the Governing Board and Governor of the Central Bank of Sri Lanka
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