Regulatory Alerts2025-11-07 | Finance Business Act Directions No.03 of 2025Central Bank of Sri Lanka Directions on Liquidity Risk Management for Finance Companies (No. 03 of 2025)
The Central Bank of Sri Lanka has issued Directions No. 03 of 2025 requiring licensed Finance Companies to establish a robust, integrated liquidity risk management framework encompassing strategy, policy, governance, and control mechanisms. The directive enforces phased compliance based on asset size, with entities holding Rs 100 billion or more adhering by April 2026 and smaller entities by April 2027, while mandating quarterly stress testing, formal contingency funding plans, and strict limit escalation procedures. Finance Companies must ensure transparent stakeholder disclosure through annual and quarterly financial reports, alongside Board-level notifications of material liquidity developments to maintain ongoing regulatory compliance.
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