Regulatory Alerts2026-05-27 | Finance Business Act Directions No.03 of 2026Amendments to Capital Adequacy Requirements
The Governing Board of the Central Bank of Sri Lanka issued Finance Business Act Directions No. 03 of 2026 to update capital adequacy calculations for financial institutions. The directive replaces the risk-weighted asset computation for gold-secured retail claims, applying 10 percent, 40 percent, and 100 percent risk weights to loans with loan-to-value ratios of 70 percent or less, between 70 and 100 percent, and over 100 percent, respectively. These revised risk weight thresholds become effective on September 1, 2026.
2.t May2026 ~ GOVERNING BOARD CENTRAL BANK OF SRI LANKA FINANCE BUSINESS ACT DIRECTIONS No.03 of 2026 AMENDMENTS TO CAPITAL ADEQUACY REQUIREMENTS Issued under Section 12(1) of the Finance Business Act, No.42 of2011 The Governing Board hereby issues the following amendments to the Finance Business Act (Capital Adequacy Requirements) Directions No.03 of 2018. Accordingly, the following shall replace computation of risk weighted assets amount for credit risk applicable for retail claims secured by gold under Schedule I of the Finance Business Act (Capital Adequacy Requirements) Directions No.03 of 2018. Schedule I Part 2(A): Computation of Risk Weighted Assets Amount for Credit Risk Code Item 20.3.4.2.0.0 Retail claims secured by Gold Web return Threshold Risk weight code (%) 20.3.4.2.1.0 Total outstanding amount of the claims with a 10 Loan to Value Ratio less than or eaual to 70% 20.3.4.2.2.0 Total outstanding amount of the claims with a 40 Loan to Value Ratio over 70% and up to 100% 20.3.4.2.3.0 Total outstanding amount of the claims with a 100 Loan to Value Ratio over 100% This direction shall be effective from 01.09.2026. 1 (f'-0 Dr. ~ P Nandala eerasinghe ~~ Chairperson of the Governing Board and Governor of the Central Bank of Sri Lanka