Regulatory Alerts2018-12-28 | Banking Act Directions No. 12 of 2018Leverage Ratio Under Basel III for Licensed Commercial and Specialised Banks
The Monetary Board of the Central Bank of Sri Lanka has issued Banking Act Directions No. 12 of 2018 to mandate a minimum 3 per cent Leverage Ratio for licensed commercial and specialised banks, effective January 2019. Licensed institutions must calculate this non-risk-based supplementary measure quarterly by dividing Tier 1 capital after deductions by a comprehensive exposure measure that aggregates on-balance sheet assets, derivatives, securities financing transactions, and off-balance sheet items. Banks that fall below the threshold are restricted from paying dividends or repatriating profits until compliance is confirmed, and all covered entities must submit quarterly reports via the central bank’s web-based surveillance system.
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