Regulatory Alerts2020-09-30 | Banking Act Direction No. 10 of 2020Amendments to Banking Act Directions on Financial Derivative Transactions for Licensed Commercial Banks and Licensed Specialised Banks
The Monetary Board of the Central Bank of Sri Lanka amended Banking Act Directions No. 4 of 2018 to encourage foreign capital inflows by updating financial derivative transaction rules for licensed commercial and specialised banks. The revised framework redefines Non Market Maker deals to mandate same-day back-to-back covering without retaining market risk, while restricting marked-to-market gain payments except for derivatives linked to government securities held by foreign investors. Furthermore, the amendments exempt inward investment swaps from specific gain-payment requirements and insert a new provision to streamline regulatory compliance for eligible transactions.
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