Regulatory Alerts2021-01-19 | Banking Act Direction No. 1 of 2021Restrictions on Discretionary Payments of Licensed Banks
The Monetary Board of the Central Bank of Sri Lanka issued Direction No. 01 of 2021 to preserve liquidity and capital buffers amid the COVID-19 pandemic by restricting discretionary payments across all licensed banks. Local incorporated banks must defer cash dividends and foreign-branch commercial banks must hold profit repatriations until their FY2020 financial statements are audited, while all institutions must weigh Basel III capital rules and pandemic impacts before approving payments. Additionally, a moratorium until 30 June 2021 prohibits share buy-backs and increased management or board allowances, restricts non-essential operational spending, and mandates strict prudence for any capital expenditures.
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