Regulatory Alerts2019-12-20 | Banking Act Directions No. 11 of 2019Amendments to Directions on Capital Requirements under Basel III for Licensed Commercial Banks and Licensed Specialized Banks
The Monetary Board of the Central Bank of Sri Lanka issued Banking Act Directions No. 11 of 2019 to amend capital adequacy rules for licensed commercial and specialized banks. The updated directions mandate minimum capital ratios of 7.0 percent for Common Equity Tier 1, 8.5 percent for Total Tier I, and 12.5 percent for the Total Capital Ratio, all inclusive of the capital conservation buffer. Additionally, Domestic Systemically Important Banks must maintain higher loss absorbency buffers that increase these baseline ratios according to Monetary Board determinations.
20 December 2019 MONETARY BOARI) CENTRAL BANK OF SRI LANKA BANKING ACT DIRECTIONS No.11 of20l9 AMENDMENTS TO DIRECTIONS ON CAPITAL REQUIREMENTS UNDER BASEL III FOR LICENSED COMMERCIAL BANKS AND LICENSED SPECIALISED BANKS Banking Act Directions No. I of 2016 on Capital Requirements under Basel III for licensed commercial banks and licensed specialised banks hereinafter referred to as licensed banks are amended by replacing the following Directions. 3. Minimum Capital Requirements 3.1 Every licensed bank shall maintain, at all times, the minimum capital ratios prescribed below in Table 01 and shall ensure compliance with Schedule I annexed to Banking Act Directions No. 1 of 2016 on Capital Requirements under Basel III for licensed banks. Table 01 - Capital Requirements for Licensed Banks Components of Capital Capital Adequacy Ratio to be Maintained Common Equity Tier 1 including Capital Conservation Buffer 7.0 % Total Tier I including Capital Conservation Buffer 8.s % Total Capital Ratio including Capital Conservation Buffer t2.5 % Licensed banks which are determined as Domestic Systemically Important Banks (D-SIBs), from time to time shall maintain additional Higher Loss Absorbency (HLA) requirements as specified by the Monetary Board in the form of Common Equity Tier 1. Table 02 - Capital Requirements for D-SIBs Components of Capital Capital Adequacy Ratio to be Maintained Common Equity Tier 1 including Capital Conservation Buffer 7.0 % + HLA Total Tier I including Capital Conservation Buffer 8.5 % + HLA Total Capital Ratio including Capital Conservation Buffer 12.5 % + HLA 3.2
J0 December 2019 MONETARY BOARI) CENTRAL BANK OF SRI IANI(A BANKING ACT DIRECTIONS No. 11 of 2019 3.3 Sections relating to D-SIBs refer-red tq in Schedule I of Banking Act Ditections No. 1 of 2016 on Capital Requirernents under Basel III for licensed banks is amended in line with Direction3.2 above. tlgt* Dr. Indrajit Coomaraswamy Chairmnn of the Monetary Board and Gove.rnor of the Central Bank of Sri Lanka