Regulatory Alerts2019-12-20 | Banking Act Directions No. 10 of 2019Framework for Dealing with Domestic Systemically Important Banks
The Monetary Board of the Central Bank of Sri Lanka issued Banking Act Directions No. 10 of 2019 to establish a regulatory framework for identifying and managing Domestic Systemically Important Banks (D-SIBs). The framework evaluates banks using size, interconnectedness, substitutability, and complexity indicators to assign them to three capital surcharge buckets ranging from 1.0% to 2.0% of risk-weighted assets, payable in Common Equity Tier 1 capital. Designated institutions must publicly disclose key metrics if their leverage ratio exposure exceeds Rs. 400 billion and face dividend distribution restrictions or mandatory remediation plans upon breaching their Higher Loss Absorbency requirements.
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