Amendments to Banking Act Directions No. 08 of 2019 on Assessment of Fitness and Propriety for Licensed Bank Directors in Sri Lanka

28 June2024
CENTRAL BANK OF SRI L.{NKA
BANKING ACT DIRECTIONS No.03 of2024
AMENDMENTS TO THE BANKING ACT DIRECTIONS NO. 08 OF 2019 ON ASSESSMENT OF FITNESS AND PROPRIETY OF DIRECTORS OF LICENSED BANKS IN SRI LAI\KA Banking Act Directions No. 08 of 2019 dated 19.12.2019 on Assessment of Fitness and Propriety of Directors of Licensed Banks in Sri Lanka are hereby amended by replacing Directions 2.1 and
2.3 as givOn below.
2 Information to be fumished and deadline for submission 2.1 2.3 The person proposed to be appointed, elected or nominated as a Director of a licensed bank shall submit the original Affidavit as given in Schedule I hereto, for the assessment of fitness and propriety before such person is appointed, elected or nominated to the licensed bank. The Cornpany Secretary shall forward the Affidavit and
Schedule II hereto with respect to the person proposed to be
appointed, elected or nominated as a Director of a licensed bank and the continuing Directors of a licensed bank. ) No*J^_ f Mrs.KMANDaulagala Chief Executive Officer/Senior Deputy Governor of the Central Bank of Sri Lanka

Schedule I
Affidavit to be submitted by Directors proposed to be appointed/elected/nominated in licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks) and the continuing Directors of licensed banks in terms of sections 42, and 76H of the Banking Act, No. 30 of 1988 (As amended) AFFIDAVIT I ….………………………………………………………………………….……… (full name), holder of National Identity Card No1 .……….……………… and Passport No. …………………… of …….…………………………………………………….…………… (address), being a [Buddhist / Hindu/ Muslim/ Christian / Catholic/other ……………………. (please specify)] do hereby [solemnly, sincerely and truly declare and make oath/affirm (please specify as appropriate)] as follows:
1 I am the [affirmant / deponent] above named.
2 I state that I have been proposed to be appointed, elected or nominated as the …………...………………………. (designation) of ………………………………….… (name of bank), which is a licensed commercial bank/licensed specialised bank under the Banking Act, No. 30 of 1988 (as amended). 3 I state that I possess the following academic and/or professional qualification/s in Banking, Finance, Economics, Accounting, Business Administration, Information Technology, Risk Management, Law or any other relevant discipline as may be determined by the Central Bank of Sri Lanka according to the mandate/business model of the bank. Qualifications Relevant Discipline Country Name of the Institution Year of Completion Academic (i) (ii) Professional (i) (ii) 1 Not applicable for expatriates.

4 I state that I possess the following effective experience in Banking, Finance, Economics, Accounting, Business Administration, Information Technology, Risk Management, Law or any other relevant discipline as may be determined by the Central Bank of Sri Lanka, according to the mandate/business model of the bank. Description Name of the Institution/ Own Business Designation /Position Nature of Appointment* Work Specialization Date of Appoint ment (dd/mm / yyyy) Service Period (dd/mm/ yyyy to dd/mm/ y yyy) Current Positions Directorships Other Positions Previous Positions Directorships Other Positions

• Independent/ Non-Independent/ Executive/ Non-Executive/ Alternate/ Ex-officio/ Other (Please Specify)
  5 I state that there is a finding/no finding of any regulatory or supervisory authority, professional association, any Commission of Inquiry, tribunal or other body established by law in Sri Lanka or outside Sri Lanka, to the effect that I have committed or have been connected with the commission of any act which involves fraud, deceit, dishonesty or any other improper conduct. 6 I state that I am subject/not subject to any proceedings, inquiry or investigation consequent upon being served with notice of a charge involving fraud, deceit, dishonesty or other similar criminal activity, by any court, tribunal, regulatory authority, supervisory authority, professional association, commission of inquiry, or any other body established by law, in Sri Lanka or outside Sri Lanka. 7 I state that I have been convicted/not been convicted by any court in Sri Lanka or outside Sri Lanka in respect of a crime committed in connection with financial management or of any offence involving moral turpitude.

8 I state that I am/am not an undischarged insolvent or have been/not been declared a bankrupt in Sri Lanka or outside Sri Lanka. 9 I state that I have failed/not failed to satisfy any judgment or order of any court whether in Sri Lanka or outside Sri Lanka, to repay a debt. 10 I state that I have been/not been declared by a court of competent jurisdiction in Sri Lanka or outside Sri Lanka, to be of unsound mind. 11 I state that I have been/not been removed or suspended by an order of a regulatory or supervisory authority from serving as a Director/Chief Executive Officer/Officer Performing Executive Functions or any other officer in a licensed bank or any other financial institution or corporate body, in Sri Lanka or outside Sri Lanka. 12 I state that I have been/not been a Director, Chief Executive Officer or have held/not held any other position of authority in any bank or financial institution – (i) whose licence has been suspended or cancelled; or (ii) which has been wound up or is being wound up, or which is being compulsorily liquidated; whether in Sri Lanka or outside Sri Lanka. 13 I state that to the best of my knowledge I am a fit and proper person proposed to be appointed, elected or nominated as an Independent Non-Executive/ Non-Independent Non￾Executive/ Executive/ Alternate/ Ex-officio Director/ Other (specify) of a licensed bank in terms of the provisions of the Banking Act No.30 of 1988 (as amended). 14 I state that I am not prevented by any written law from being appointed to the above post. 15 I state that the information given in Annex I hereto is to the best of my knowledge and belief, true and complete. The averments contained herein were read over to the [affirmant/deponent] who having understood the contents hereof and having accepted same as true, affirmed/swore to and placed his/her signature at ………. on this ……… day of ……… (Month, Year) Before me JUSTICE OF THE PEACE / COMMISSIONER FOR OATHS Affix stamps as applicable

Annex I
Declaration to be submitted by proposed/continuing Directors in licensed banks Passport Size Photo (Taken within last 6 months) DECLARATION Name of the Bank:
Personal Information, Qualifications and Business Transactions

1. Personal Details
   1.1 (i) Name with Initials:
   (ii) Title: Mr/Mrs/Ms/Dr/Prof/Other
   (Please specify)
   (iii) Age as at date of signing the affidavit: (dd/mm/yyyy) (iv) Date of Birth: (dd/mm/yyyy) (v) Sex:
   (vi) Civil Status: (vii) Nationality: (viii) Citizenship2 :
   (ix) Local/expatriate:
   1.2 Contact
   Details
   Permanent Address:
   Residential Address:
   (i) Telephone Mobile
   Fixed line
   Fax
   (ii) E- mail Personal
   Official
   1.3 Occupation or Profession:
   2 A Dual Citizen is required to state whether he/she should be considered as local or expatriate.

1.4 (i) Post/Designation proposed to be
appointed in the bank:
(ii) Proposed date of appointment to the
Post/Designation (dd/mm/yyyy)
1.5 (i) Nature of the appointment (Please mark X in relevant box(es):
Independent Executive Alternate
Non-Independent Non￾Executive
Ex-officio
Senior
Director
Other (Please
Specify)
(ii) If non-independent, reasons for determining as non-independent3 :
(iii) If nominated by major shareholder/s, name/s of such nominating shareholder/s:
(iv) If an Alternate, name of the Principal Director:
1.6 1.6.1 Details of close relations in terms of Section 86 of the Banking Act No.30 of 1988
(as amended)
(i) Full name of the Spouse:
(ii) NIC No: (iii) Passport No:
1.6.2. Details of dependent children
(i) Full Name (ii)NIC No: (iii) Passport No:
2. Additional Qualifications:
Special Assignments /
Consultancy/Advisory/Audit
Services
Name of the
Institution
Description Service Period
(dd/mm/yyyy to dd/mm/yyyy)
(i)
(ii)
3. Details of all direct and/or indirect share ownership in entities, presently held.
Name of the
Institution/s
Voting/Non￾voting
No. of Shares For Indirect
Holdings, Name of the Institution of Direct
Holding
Percentage
Holding
Direct Indirect Direct Indi rect
3 Please refer the criteria for determining independence of a director specified in the Banking Act, Directions No. 11 of 2007 and 12 of 2007 on Corporate Governance of Licensed Banks in Sri Lanka (as amended).

4. Business Transactions
   4.1 I state that I have/do not have deposits with the bank, its subsidiaries4
   or associate companies5
   (If yes, please state name/s of the institution/s).
   4.2 I state that I currently have (had) the following business transactions during the two years
   immediately preceding the appointment, with licensed banks, their subsidiaries, associate companies and affiliated companies/entities, and other related parties6 of the licensed bank, and other financial institutions as defined in the Central Bank of Sri Lanka Act, No.16 of 2023. Name of the Institution/s Date of Transaction (dd/mm/yyyy) Amount as at dd/mm/yyyy (Rs. mn) Classificatio n (Performing/ Non￾performing) Type and Value of Collatera l (Rs.mn) % of Bank’s Regulatory Capital/Relevant Entity’s Capital Limit Outstanding Borrowings7 Investments8
   4.3 I state that I am the Guarantor for the following business transactions.
   Type of
   Transaction
   Name of the
   Institution/s
   Date of Transaction
   (dd/mm/yyyy)
   Amount as at dd/mm/yyyy
   (Rs.mn)
   4.4 I state that I currently have/ do not have or have had/ have not had during the two years
   immediately preceding the appointment, a material business relationship9 with the licensed bank. ‘Subsidiary’ as defined in Section 17(3) of the Banking Act No.30 of 1988 (as amended). ‘Associate’ as defined in Section 46(1) of the Banking Act No.30 of 1988 (as amended). ‘Related Parties’ as defined in the Banking Act Directions No. 11 of 2007 and 12 of 2007 on Corporate Governance of Licensed Banks in Sri Lanka (as amended). 7 Shall include on-balance sheet and off-balance sheet borrowings. 8 Shall include debt instruments. “Material business relationship” shall mean a relationship resulting in income/non-cash benefits equivalent to 20 per cent of the director’s annual income. Any income/non-cash benefits received by such director which are applicable on a uniform basis to all non-executive directors on the board shall not be considered in calculating the annual income for this purpose.

5. Appointments, Shareholdings and Business Transactions of Close Relations
   5.1 I state that my close relations10 are presently employed as directors, chief executive officers,
   or officers performing executive functions of the following licensed banks, their subsidiaries, associate companies, affiliated companies/entities, and other related parties of the licensed bank, and other financial institutions as defined in the Central Bank of Sri Lanka Act, No.16 of 2023. Name of the Close Relation Name of the Institution Position
   5.2 I state the following details of all direct and/or indirect share ownerships in entities,
   presently held by my close relations.
   Name of the close relations
   Voting/Non￾voting
   No. of Shares For Indirect
   Holdings, Name of the Institution of Direct
   Holding
   Percentage
   Holding
   Direct Indirect Direct Indi rect
   5.3 I state that my close relations currently have (had) the following business transactions
   during the two years immediately preceding the appointment, with licensed banks, their subsidiaries, associate companies, affiliated companies/entities, and other related parties of the licensed bank, and other financial institutions as defined in the Central Bank of Sri Lanka Act No.16 of 2023. 10 Close Relations as defined in the Section 86 of the Banking Act No.30 of 1988 (as amended). Name of the Close Relation Name of the Institution Date of Transaction (dd/mm/yy) Amount as at dd/mm/yyyy (Rs.mn) Type and Value of Collateral (Rs mn) % of Bank’s Regulatory Capital/relevant entity’s capital Limit Outstanding Borrowings7

6. Other Information
   6.1 I state that I am subject to/not subject to supervision or regulation of regulatory
   authority/ies, supervisory authority/ies established outside Sri Lanka (if the answer is given in the affirmative, please specify the regulatory/supervisory authority).
   6.2 I state that the following information of the inquiries/investigations to which I have been
   subject, conducted by the regulatory authority, supervisory authority, professional association, commission of inquiry, financial institution as defined in the Central Bank of Sri Lanka Act, No.16 of 2023 or any other body established by law in Sri Lanka or outside Sri Lanka, if any:
   Year Name of the
   Institution
   Subject Matter Current Status

7. Any other explanation/information with regard to the information furnished above and
   other information considered relevant for assessing the suitability of the proposed or continuing director. DECLARATION:
   I state that I am aware of the provisions of the Banking Act, No. 30 of 1988 (as amended) and the Directions and Determinations issued thereunder, on assessment of fitness and propriety of my position and confirm that the above information is to the best of my knowledge and belief true and complete. I undertake to keep the licensed bank fully informed, as soon as possible, of all subsequent events, which are relevant to the information provided above. Date:____________ ______________________________ Signature of the Director proposed to be appointed/elected /nominated Investments8

Guidance to Duly Complete the Affidavit and Declaration to be submitted by the Proposed/ Continuing Directors of Licensed Banks incorporated in Sri Lanka This guidance is issued to ensure that complete and accurate information is provided by licensed banks for assessing the fitness and propriety of Directors, prior to his/her appointment, election or nomination, as the case may be, to the respective licensed bank in Sri Lanka.

1. Purpose of obtaining the Affidavit and Declaration
   (i) The purpose of obtaining Affidavits and Declarations of Directors of licensed banks is to enable the Bank Supervision Department of the Central Bank of Sri Lanka to assess the fitness and propriety of such directors in terms of the provisions of the Banking Act, No.30 of 1988 (as amended). (ii) Accordingly, the Bank Supervision Department requires comprehensive information to evaluate the qualifications, experience, integrity and compliance with the requirements specified in the Banking Act, to assess the suitability of the Directors prior to their appointments to the respective licensed bank. (iii) The Affidavit and Declaration submitted by a director shall be legally binding documents in the event of any dispute/controversy.
2. Affidavit
   (i) It is preferable that the affidavit is prepared as a fresh document, based on the format provided by the Central Bank of Sri Lanka, so as to avoid inclusion of unnecessary words. However, if the given format is filled, all alterations, erasures and interlineations should be initialed by the Commissioner for Oaths/Justice of the Peace immediately after all such amendments. (ii) All blank spaces should be completed appropriately. (iii) Appropriate words should be used based on the religion of the officer. If the officer refrains/objects to disclose his/her religion, a confirmation should be submitted by the officer stating that:

• He/she is an atheist or belongs to a religion not mentioned in this Affidavit; or
• He/she objects to disclosing his/her religion.

(iv) Strike-out the irrelevant word(s). If the irrelevant words are stricken out, the Commissioner for Oaths/Justice of the Peace should place his initials immediately after all such amendments. If the answer is given in the affirmative, provide relevant information. (v) If the person is a foreigner and signs the Affidavit while in overseas:

• Signature of the person should be attested by a Commissioner for Oaths or an
  equivalent in the country in which he places his signature.
• Attestation should be made in front of the diplomatic, consular officer of Sri Lanka
  in the country where the Director resides or in terms of the laws applicable in such country. (vi) Affix a stamp for the value applicable as at the date of signing the Affidavit, if applicable. (vii) If the affidavit is executed in Sri Lanka, the same shall be attested by a Commissioner for Oaths/Justice of the Peace immediately after placing the signature of the person at ‘Before me.’

3. Declaration
   (i) All sections of the Declaration should be:

• duly completed and irrelevant sections, if any, should be stated as Not
  Applicable/Nil/None.
• signed and dated.
  (ii) If there is no comment it should be stated as Not Applicable/Nil/None.

Schedule II
Assessment of Fitness and Propriety of Directors of Licensed Banks in Sri Lanka Information to be submitted by the Company Secretary

1. Corporate Information
   Recommendation of the Nomination Committee/Appointing Authority for Directors Name of the Licensed Bank Full Name of the person proposed to be appointed/elected/nominated or continuing as a Director Assessment Criteria (Please specify the specific knowledge/skills considered by the Nomination Committee and the Appointing Authority) Recommendation (Please attach minutes of the resolution/decision of the Nomination Committee and the Appointing Authority)
2. Remarks of the Board of Directors
   (1) Any other explanation / information regarding the details furnished above. (2) Submitted to the Board of Directors of the Bank /Approval has been granted by the Board of Directors for above proposed appointment, nomination or election at the meeting dated…………(dd/mm/yyyy)
3. I state that the affidavit has been completed in terms of Sections 42 (with respect to licensed
   commercial banks), and 76H (with respect to licensed specialised banks) of the Banking Act, No. 30 of 1988 (as amended) and the Directions and Determinations, issued thereunder. Name:
   Signature of the Company Secretary and the Official Stamp:
   Date: