Regulatory Alerts2014-06-26 | Banking Act Directions No.2 of 2014Amendment to Banking Act Directions No. 7 of 2007 on Maximum Amount of Accommodation
The Monetary Board of the Central Bank of Sri Lanka issued Banking Act Directions No. 2 of 2014 to revise maximum accommodation limits for licensed commercial banks by replacing Direction 5. The amended rule caps exposure to specific customer categories at 55 percent of total outstanding accommodation when their individual lending exceeds 15 percent of the bank's capital base. The calculation explicitly excludes government exposure, certain Monetary Board-approved accommodations, and direct head office or foreign branch funding for foreign-incorporated banks.
Directions issued by the Monetary Board in terms of Section 46(1) of the Banking Act, No. 30 of 1988, as amended.
[Signature]
B D W A Silva Senior Deputy Governor Central Bank of Sri Lanka
Colombo 26 June 2014
BANKING ACT DIRECTIONS NO. 2 OF 2014
AMENDMENT TO BANKING ACT DIRECTIONS NO. 7 OF 2007 ON MAXIMUM AMOUNT OF ACCOMMODATION
In the exercise of the powers conferred by Section 46(1) of the Banking Act, No. 30 of 1988, last amended by the Banking Act, No. 46 of 2006, the Monetary Board hereby issues following Directions amending Banking Act Directions No. 7 of 2007 dated 01 November 2007 issued by the Monetary Board of the Central Bank of Sri Lanka. These Directions may be cited as the Banking Act Directions No. 2 of 2014.
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The following new Direction shall replace Direction 5 of the Banking Act Directions No. 7 of 2007 dated 01 November 2007.
5 (1) In the case of accommodation granted as at any given date to any category of customers referred to in paragraphs 2(i) and 2(ii) above in excess of 15 per centum of the capital base of the licensed commercial bank, the sum total of the outstanding amount of accommodation granted to such customers shall not exceed 55 per centum of the total outstanding amount of accommodation granted by the licensed commercial bank to all customers as at the end of the immediately preceding month.
(2) The following accommodations shall be excluded from the computation of Direction 5(1) above.
(i) Accommodation granted to the Government of Sri Lanka (GOSL). (ii) Accommodation granted in excess of the maximum limits specified under Directions 3 and 4 above with the approval of the Monetary
Board in terms of Direction 6 below. (iii) Accommodation granted under Direction 7(iii) below.
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The following new Directions shall be included immediately after Direction 7(ii) of the Banking Act Directions No. 7 of 2007 dated 01 November 2007.
(iii) Accommodation granted by a licensed commercial bank incorporated outside Sri Lanka if such accommodation is funded directly through funds raised from its Head Office and/or any branch of such bank operating outside Sri Lanka.