Regulatory Alerts2024-02-13 | Finance Business Act Directions No.01 of 2024Periodic Reporting Requirements
The Central Bank of Sri Lanka issued Direction No. 01 of 2024 to mandate Licensed Finance Companies to submit accurate, consistent, and complete periodic returns through the FinNet reporting system by stipulated deadlines. The directive requires each company to designate a Key Responsible Person within three months to oversee compliance and promptly report any personnel changes. Furthermore, the Central Bank reserves the right to enforce regulatory actions against non-compliant entities and designated officers while amending and revoking several prior reporting directions on liquid assets, capital adequacy, interest rates, and credit facilities.
GOVERNING BOARD CENTRAL BANK OF SRI LANKA
13 February 2024 | FINANCE BUSINESS ACT DIRECTIONS | No. 01 of 2024
PERIODIC REPORTING REQUIREMENTS
| 1. Legal Provisions | 1.1. In terms of section 12(1) of the Finance Business Act, No. 42 of 2011 (FBA) read with section 133 of the Central Bank of Sri Lanka Act No. 16 of 2023, the Central Bank of Sri Lanka (CBSL) may give directions to the Licensed Finance Companies (LFCs) regarding Periodic Reporting Requirements (PRRs). |
| 2. Objectives of the Directions | 2.1. Obtain timely, accurate, consistent, and complete information of LFCs to ascertain the manner in which the business and corporate affairs of LFCs are being conducted or for any other specified purpose. |
| 3. Applicability | 3.1. This direction shall be applicable to all the Periodic Returns (PRs) in the Financial Information Network Reporting System (FinNet) of the CBSL introduced under FBA Directions. |
| 4. Responsibilities of LFCs | 4.1. Every LFC shall submit accurate, consistent, and complete PRs by the stipulated deadlines. <br> 4.2. Every LFC shall assign the responsibility of ensuring the compliance with the instructions pertaining to accuracy, consistency, and completeness of PRs in the FinNet to a specific Key Responsible Person (KRP), within three months of issuing this Direction. Any subsequent alterations to the KRP nomination must be promptly communicated via email or letter to the Director within three working days following such changes. <br> 4.3. The assigned KRP is obliged to ensure the timeliness, accuracy, consistency, and completeness in relation to the relevant PR. |
| 5. Regulatory measures to secure the compliance | 5.1. CBSL may take regulatory actions against any LFC and the relevant KRPs, in the event of a failure to meet the conditions stipulated on the relevant PR. |
| 6. Definitions | 6.1. “Key responsible person” shall be a person as defined in section 4.1(b) of Finance Business Act Directions No. 06 of 2021 (Assessment of Fitness and Propriety of Key Responsible Persons). <br> 6.2. “Director” means the Director of Department of Supervision of Non-Bank Financial Institutions. |
| 7. Amendments to Directions | 7.1. Section 05 of Finance Companies (Liquid Assets) Direction No. 4 of 2013 is hereby amended by repealing the section thereof, and the substitution therefor, of the following:- |
GOVERNING BOARD CENTRAL BANK OF SRI LANKA
13 February 2024 | FINANCE BUSINESS ACT DIRECTIONS | No. 01 of 2024
| “Every finance company shall report the details of the liquid assets to the Director through the Web Based Reporting System (FinNet) by fifteenth (15th) day of the following month”; <br> 7.2. Section 2.1 of Finance Business Act (Capital Adequacy Requirements) Direction No. 03 of 2018 is hereby amended by repealing the subsection (i) thereof, and the substitution therefor, of the following:- <br> “Quarterly: report the position as at the last calendar day of each quarter, by fifteenth (15th) of the following month”; | |
| 8. Revocation of Directions | Following Directions will be revoked from date of issuing this Direction: <br> 8.1. Finance Companies (Reporting Requirements) Direction No. 02 of 2011 <br> 8.2. Section 4.1 of Finance Business Act (Maximum Interest Rates on Deposits and Debt Instruments) Directions No. 01 of 2019 <br> 8.3. Section 07 of Appendix C of Finance Business Act (Classification and Measurement of Credit Facilities) Direction No. 01 of 2020 |
(Signature)
Dr. P Nandalal Weerasinghe
Chairman of the Governing Board and Governor of the Central Bank of Sri Lanka
2