Documente Academic
Documente Profesional
Documente Cultură
rom time to time, the Central Bank receives numerous inquiries from the public with
regard to institutions that are authorised to accept deposits and other investments
from the public, the type of deposits that they could accept and the types of loans and
financial services that they would provide and on what terms. The public also wish to
have an indication of the safety in dealing with other financial institutions that engage in
trading in securities, foreign exchange, etc. Most are concerned with the safety of
their money and the adequacy of the return they receive by way of interest, etc.
While there is no easy way by which one can answer all these questions, it is
important to bear in mind that there are always risks inherent in all investment
decisions whether they are deposits or other funds. It should be clearly understood
that these risks must be borne by depositors, lenders and other investors and that
the return on a deposit or a loan or a transaction will reflect the degree of risk, among
other things. It is believed that higher the risk, higher is likely to be the return on the
investment or transaction, and that the opposite also holds is valid. Therefore, when
the return is high, the public should be mindful of the fact that the underlying risk too can
be high.
The Central Bank regulates and supervises only the banks and other financial
institutions licensed or approved by it. The fact that these institutions are regulated,
supervised or approved by the Central Bank does not involve a guarantee of the
deposit, the investment or the transaction, whatsoever. However, the Central Bank
regulates and supervises the institutions to encourage them to act in a prudent manner,
which will protect the public interest. No institution is legally permitted to use the
word Bank, Banker or Banking in its name or to carry on the business of
banking or finance without the written approval or licence of the Central Bank. By
granting the approval or licence to a particular institution, it only authorises the institution
to carry on the business in compliance with the requirements of the relevant statues. The
approval or licence does not mean a guarantee of deposits or other transactions
that the public have with the institution or the safety or the soundness of the
institution. The publication of the names of the institutions licensed or approved
by the Central Bank should not in any way be construed as a recommendation by
the Central Bank to the public to deposit or invest their money in any one of those
institutions or to assume that those institutions are always safe and sound. The
safety of an institution and thereby the safety of deposits or other investments made by
the public with an institution depends on the extent of efficiency of the risk management
of the business of the institution by its managers and the Board of Directors. Therefore,
it is the responsibility of the depositors or other investors to exercise due care
and vigilance over the institutions they deal with. In this regard, the Central Bank
presents the following information in the public interest, with a view to enhancing the
awareness of the public about the financial system.
Rs. Bn.
358
%
14.2
Group Total
1,490
59.0
1,133
510
471
152
44.9
20.2
18.7
6.0
299
11.8
58
2.3
416
16.5
341
50
25
13.5
2.0
1.0
1,905
75.5
30
1.2
1.0
0.2
201
7.9
87
50
63
3.5
2.0
2.5
30
1.2
22
4
4
0.9
0.2
0.2
261
10.3
2,524
100.0
Merchant Banks
Unit Trusts
Venture Capital Companies
Group Total
Total Assets
Investments in F
inanci
al
Financi
inancial
Institutions
In ttee rms of cu
rr
egulator
y
curr
rreent rregulator
egulatory
nd fina
nc
ss
law
anking a
business
ss,,
lawss on b
ba
and
financ
ncee busine
carr
ying on deposit-taking busine
ss
rry
business
without pe
rmission obtained u
nde
nderr
permission
unde
th
elev
ant statut
n offe
nc
thee rrelev
eleva
statutee is a
an
offenc
ncee. Th
Thee
g een
n eer
ral pub
lic may ccome
ome a
cross
public
across
insta
nc
instanc
ncees wh
wheere cceertain institutions
canv
as fu
nds from th
lic by w
ay
nvas
funds
thee pub
public
way
of diffe
re ntly na
med inve
stme
nts
differ
named
investme
stments
without using th
deposit
, but
thee tteerm
deposit
deposit,
such inve
stme
nts may w
ell cca
arr
y some
investme
stments
well
rry
or all of th
ove
-me
ntioned
thee ab
above
ove-me
-mentioned
ch
aract
cha
cteeristics of deposits
deposits.. Th
Theerefor
eforee,
th
ne
ral pub
lic is a
dvised to mak
thee ge
gene
ner
public
advised
makee
th
eir own asse
ssme
nt of th
heir
assessme
ssment
thee risks
invo
lved in inve
sting th
eir money
involved
investing
their
moneyss in
deposits or oth
ey mak
otheerwise wh
wheen th
they
makee
inve
stme
nt decisions
investme
stment
decisions..
Deposits
eposits: A deposit means a sum of
money accepted, having the following
terms and characteristics.
Money is repaid either on demand or at
other time or in other circumstance
Domestic Banks
1. Bank of Ceylon
2. Commercial Bank of Ceylon Ltd.
3. DFCC Vardhana Bank Ltd.
4. Hatton National Bank Ltd.
5. Nations Trust Bank Ltd.
6. NDB Bank Ltd.
7. Pan Asia Banking Corporation Ltd.
8. Peoples Bank
9. Sampath Bank Ltd.
10. Seylan Bank Ltd.
11. Union Bank of Colombo Ltd.
Institutions P
ermitt
ed by the
Permitt
ermitted
al Bank
Central
Centr
Telephone
2446790
2328193-5
2371371-2
2660660
4313131
2448448
2565570
2327841-9
2300260
4701777
2370971
Telephone
2573561
081-2214115 / 7
025-2223080
041-2226208 / 9
045-2224566
055-2222849
037-2227428 / 9
2673673
2553663
2438141
2687265
2326495
08-22227000
2694753
4719999
032-2222055
08-12234963
2694822
2573660
2314466
2441930
2508507
2665780
2343720
2301501
2686523
081-2201201
081-2224619
081-2223235
2672029
2595210
081-2225130
2694026
2688421
Types of Depo
sit Acc
ounts
Deposit
ccounts
Licensed
Specialised
Banks
Registered
Finance
Companies
Int
er
est P
ayments on Depo
sits
nter
erest
Payments
Deposits
Other IInstitutions
nstitutions permitt
ed
permitted
to acc
ept depo
sits
accept
deposits
It should b
rly u
nde
rstood
bee clea
clearly
unde
nderstood
th
at th
arr
ying on of busine
ss by a
n
that
thee cca
rry
business
an
institution simi
la
ss of a
simila
larr to th
thee busine
business
bank or a fina
nc
ompa
ny which h
as
financ
ncee ccompa
ompany
has
been specified in th
oneta
r y Law
thee M
Moneta
onetar
Act
nking Act or th
ina
nc
ct,, th
thee Ba
Banking
thee F
Fina
inanc
ncee
Compa
nie
rov
al
ompanie
niess Act without th
thee app
approv
roval
of th
al Ba
nk is a
n offe
nc
nde
thee C
Ceentr
ntral
Bank
an
offenc
ncee u
unde
nderr
th
egistr
ation or inc
orpothee law
law.. Th
Thee rregistr
egistration
incorpon institution u
nde
r th
ration of a
thee
an
unde
nder
ss of
Compa
nie
ompanie
niess Act for th
thee busine
business
n th
at
banking or fina
nc
financ
ncee doe
doess not mea
mean
that
ed to eenga
nga
ge
th
rmitt
permitt
rmitted
ngage
thee institution is pe
in th
ss of b
anking or fina
nc
thee busine
business
ba
financ
ncee,
for which th
rov
al of th
al
thee app
approv
roval
thee C
Ceentr
ntral
Ba
nk is rreequir
ed.
Bank
quired.
Institutions that ar
e not
are
sits
authorised tto
o acc
ept depo
accept
deposits
Th
ne
lic is
Theerefor
eforee, th
thee ge
gene
nerral pub
public
he reby informed th
at th
ey should
that
they
ex
aution to eensu
nsu
re th
at
exeercise utmost cca
nsur
that
th
ey deposit or inve
st th
eir money with
they
invest
their
legally pe
rmitt
ed institutions
permitt
rmitted
institutions.. Risks
associat
ed with money inve
st
ed in
associated
invest
sted
illegal institutions ccould
ould b
elatively
bee rrelatively
great
ec
ause those institutions a
re
eateer b
bec
eca
ar
not rregist
egist
uthorised a
nd
egistee r ed, a
authorised
and
supe
al Ba
nk or a
ny
superrvised by th
thee C
Ceentr
ntral
Bank
any
oth
egulator
ya
uthority
otheer rregulator
egulatory
authority
uthority..
Credit R
ating
Rating
The N
atur
e of R
egulation
Natur
ature
Re
and S
uper
vision
upervision
Super
The Objectives of R
egulation
Re
and S
uper
vision
Super
upervision
Some Misc
onc
eptions about
Misconc
onceptions
Regulation and S
uper
vision
Super
upervision
onc
eption exists th
A misc
misconc
onception
that
at,, as
at
nd rregulator
egulator
al
egulator,, th
thee C
Ceentr
ntral
superrvisor a
and
supe
Ba
nk gua
ank
guarra n ttee es th
thee safety of all
deposits a
nd oth
stme
nts of th
and
otheer inve
investme
stments
thee
pub
lic:
public:
While regulators seek to achieve the
safety and soundness of the institutions
regulated by them, yet the safety and
soundness of the institutions depend
largely on the management of the
institutions by their Directors and
ectors
Managers. It is th
thee Boa
Boarrd of Dir
Directors
who b
nd
bee a
arr th
thee ultimat
ultimatee duty a
and
re sponsibi
lity in gui
ding th
sponsibility
guiding
thee
institution to ope
nd a
nd
operrat
atee in a sou
sound
and
prude
nt ma
nne
ll p
rot
ect th
udent
manne
nnerr which wi
will
prot
rotect
thee
int
nd oth
intee re st of depositors a
and
othee r
stak
eho
lde
rs
ectors should se
stakeho
eholde
lders
rs.. Dir
Directors
serrve
as u
nbiased judge
nc
unbiased
judgess of th
thee pe
perrforma
formanc
ncees
of th
thee institution. For this purpose, it is
necessary that they have oversight on the
affairs of the institution which include
mainly compliance with regulatory
requirements, adequacy of capital, quality
of assets, earning capacity, adequacy of
liquidity, exposure to various risks and risk
management system. Accordingly, the
Directors ought to be fit and proper
persons who are capable of fulfilling such
duties and responsibilities practically and
effectively. Th
Thee r efor
eforee, it is th
thee
responsibi
lity of th
lic to ex
sponsibility
thee pub
public
exeercise
utmost cca
are a
nd vi
gi
la
nc
ue
and
vigi
gila
lanc
ncee ove
overr th
thee tr
true
aff
airs
of
th
e
institutions
in
which
affairs
the
th
ey pla
ce deposits a
nd oth
hey
plac
and
othee r
inve
stme
nts
investme
stments
nts..
10
Anoth
notheer misc
misconc
onception
that
at,, as
onc
eption is th
at
egulator a
nd supe
thee rregulator
and
superrvisor
visor,, it is th
thee
th
duty of th
al Ba
nk to inform th
thee C
Ceentr
ntral
Bank
thee
pub
lic ve
rly wh
n institution
public
verry ea
early
wheen a
an
b egins to ffa
ace p
rob
lems so th
at
prob
roblems
that
depositors a
le to withdr
aw th
eir
arre ab
able
withdraw
their
money b
efor
a iill u
befor
eforee th
thee ffa
urre of th
thee
institution:
An Exper
t
s Vie
w on the R
ole
Expert
ts
iew
Role
of the Centr
al Bank as
Central
the Bank S
uper
visor
Super
upervisor
Q u eess t i o n 1 : Can th
thee sy
syst
stemic
st
emic
lity issue
rat
ed from
stability
issuess b
bee sepa
separ
ated
stabi
conc
out th
le ffai
ai
lu
onceerns ab
about
thee possib
possible
ailu
lurre of
indivi
dual fina
ncial institutions?
individual
financial
Answer
Answ
er : The answer is absolutely yes.
A Central Bank neither can nor should
guarantee the continuation of all financial
intermediaries irrespective of how badly
managed they are or how the management
has been. Even in some cases, the
management can act illegally, for example,
BCCI did in the case of a failure in the
al Ba
nk neith
UK. Although a C
Ceentr
ntral
Bank
neitheer
could nor should stop all indivi
dual
individual
fai
lu
as to b
nd
ailu
lurres, it h
has
bee p
prrepa
eparred a
and
rea
dy to stop a
n indivi
dual ffai
ai
lu
eady
an
individual
ailu
lurre
causing such cconc
onc
nd pa
nic ab
out
onceern a
and
panic
about
th
lity of th
st
em as a who
le
thee stabi
stability
thee sy
syst
stem
whole
le..
Let me give you a particular example and
I take it from my own country, i.e. UK.
11
stion 2 : A C
uestion
Cee ntr
ntral
Bank
Que
al Ba
nk
a
nd
ccontro
ontro
ls
all
dominatee s
and
ontrols
dominat
com
me
rcial b
anks
ave
omme
mercial
ba
nks.. But
But,, th
thee re h
have
been fr
auds in some of th
om
me
rcial
fra
thee ccom
omme
mercial
ba nks which ccould
ould not h
ave b
have
bee e n
det
ect
ed ea
rlie
r u
nti
as lat
detect
ected
earlie
rlier
unti
ntill it w
was
latee r
fou
nd out
found
out.. I
Itt affects th
thee moneta
monetarr y
em or th
licy of th
al
sy
st
ntral
syst
stem
thee po
policy
thee C
Ceentr
eps is it taking now to
Ba
nk. Wh
at st
Bank.
What
steps
preve
nt such fr
auds ?
event
fra
Answ
e r : Fraud is extraordinarily
Answe
difficult to detect and it is actually a
matter for the law and the police rather
al
than for the Central Bank. Th
Thee C
Ceentr
ntral
Ba
nk's ro
le is to eensu
nsu
re th
at th
Bank's
role
nsur
that
thee ove
overrall
sy
st
em of b
a nks a
nd th
ncial
syst
stem
ba
and
thee fina
financial
sy
st
em within th
onomy rremains
emains
syst
stem
thee ec
economy
sou
nd a
nd stab
le
le of
sound
and
stable
le.. I
Itt is not th
thee ro
role
th
al Ba
nk to h
ave a
n official
thee C
Ceentr
ntral
Bank
have
an
sitting in eve
anking offic
everry b
ba
officee, looking
ove
r th
ade
over
thee shoulde
shoulderr of eve
everr y tr
tra
derr or
eve
r yb
ody who is orga
nising a b
ank
ever
ybody
organising
ba
loa
n. That would be both impossible on
loan.
resources and it would be undesirable in
the degree of control that would be
exerted. It is not a function of a Central
Bank to second guess every activity that
the commercial banks were undertaking.
The commercial banks' management has
got to manage.
nec
r y to eensu
nsu
at wh
aud
neceessa
ssar
nsurre th
that
wheen fr
fra
r, th
na
geme
nt th
at
ageme
gement
that
doess occu
occur
thee ma
man
doe
allow
ed fr
a ud to occu
allowed
fra
occurr ccee rtainly
suffe
rs
suffers
rs.. But, you cannot prevent fraud
occasionally occurring at times. I took the
example of Barings. That was fraud of a
major kind occurring in one of the oldest
and highest reputationed banks in the UK
and it occurred and that sort of thing will
occur again, it is bound to occur, unless
you have a totally excessive degree of
controls by the Central Bank which will
be inappropriate.
Dealings in
Government Securities
s the agent of the Government, the
Central Bank is responsible for
managing the Government debt. The
Government of Sri Lanka, like any other
institution, borrows money to finance its
expenditure programmes. For this
purpose, it issues various types of debt
securities. The Central Bank undertakes
the function of issuing these securities on
behalf of the Government.
Th
al Ba
nk sets th
ne
ral
Thee C
Ceentr
ntral
Bank
thee ge
gene
ner
conditions which wi
ll maintain th
will
thee
stabi
lity in th
st
em as a who
le
stability
thee sy
syst
stem
whole
le..
However, there will be occasionally bank
failures. There have been bank failures in
the UK. There are bank failures every year
in the United States. The biggest bank in
France, Credit Lyonnais, effectively failed.
There are many bank failures and they are
inevitable part of the risk-taking and the
development of our economies. I admit
that some of the bank failures are
connected with fraud, but again fraud is
something that you cannot expect an
external super visor to observe as a
generality.
Frauds occu
occurr. I
Itt is nec
neceessa
ssarry to set
th
uctu
st
em so th
at
thee str
structu
ucturre of th
thee sy
syst
stem
that
f rra
a uds a
nlik
ely to occu
arr e u
unlik
nlikely
occurr. I
Itt is
13
Foreign Exchange
Transactions
nder the Exchange Control Act, the
Central Bank functions as the
agent of the Government through the
Controller of Exchange. Currently, the
Controller regulates transactions in
foreign currencies of a capital nature only,
i.e. involving sale or purchase of a capital
asset and cross-boarder lending and
investments. Current or non-capital
transactions which involve in export and
import of goods and services and
remittances are free of control. The Board
of Investment too is authorised to grant
exemption from exchange control to
companies specifically approved by the
Board of Investment.
Primary Dealers in
Government Securities
(in Alphabetical Order)
Telephone
1. Bank of Ceylon
2541938
2314700
2564933
2304430
2381696
4730000
2564706
9. People's Bank
2304484
2305842
2456907
2421697
eale
rs
Authorised D
Deale
ealers
All licensed commercial banks at
present have been permitted to deal
in foreign exchange as authorised
dealers and they have the authority to
enter into transactions of buying,
14
2544200
2300750
2325101
2326411
2445177
4525747
2448065
2564584
2440578
oney C
hange
rs
Authorised M
Money
Ch
ngers
They have been permitted to buy
foreign currency notes in exchange of
Sri Lanka Rupees and to exchange
designated foreign currencies. The
money changers (list - page 17) are not
permitted to sell foreign currency for
Rupees or convert travellers cheques
and any other foreign currency
instruments into Rupees.
stab
lishme
nts a
uthorised to
Oth
theer eestab
stablishme
lishments
authorised
acc
ept payme
nt in for
ei
gn cu
rr
ccept
payment
forei
eig
curr
rreency
Selected establishments in certain
trades have been authorised by the
Controller of Exchange to accept
payments in foreign currency. Those
are authorised hotels, gem and
jewellery traders, travel agents, duty
free shops, hospitals, agency post
offices and harbour traders (who sell
products to crew and passengers in
transit).
16
Address
Tel. No.
066-2230581
2423590
2433604
4812015
091-2277730
2438626
2472957
2320345
2850785
2388757
2449060
2451070
2437850
2432555
031-2224419
032-2007516
031-2255632
031-2232020
033-2226018
037-2224447
2421612
2432322
2565526
031-2239389
2325465
2422049
031-2236998
2343259
2341842
2436358
2331824
4527244
034-2275209
4793000
2344168
2449671
2448615
42252861
2388241
2341250
2433680
4718390
17
031-2223160
For fur
ther inquiries, please c
ontact
further
contact
Bank Supervision Department
(regarding Licensed Commercial Banks and Licensed Specialised Banks)
2477100, 2477096
E-mail : banksup@cbsl.lk
Department of Supervision of Non-Bank Financial Institutions
(regarding Registered Finance Companies and Leasing Establishments)
2477500, 2477480
E-mail : snbfi@cbsl.lk
Department of Public Debt (regarding Government Securities)
2477274, 2477282, 2477273 E-mail : pdebt@cbsl.lk
Exchange Control Department (regarding Foreign Exchange Transactions)
2477244, 2477251
E-mail : ecd@cbsl.lk
Employees Provident Fund Dept. (regarding Employees Provident Fund)
2477216, 2477211, 2477678
E-mail : epf@cbsl.lk
Information Department (regarding general information on the Central Bank)
2477424, 2477420
E-mail : information@cbsl.lk
Legal Department (regarding laws relating to banks and finance companies)
2477550, 2477546
E-mail : legal@cbsl.lk
Address : Central Bank of Sri Lanka, No. 30, Janadhipathi Mawatha, Colombo 1.
Web Site : http://www.centralbanklanka.org