Sri Lanka’s Central Bank to review liquidity regulatory requirements on the banking sector

While rigorously monitoring the liquidity risk profiles of the banks, the Central Bank of Sri Lanka (CBSL) announced that it is in the process of reviewing the currently applicable regulations on
liquidity requirements to ensure continued resilience and stability of the banking sector.

The capital levels of banks remained above the minimum statutory requirements during the eight months ending August 2022. Meanwhile, The CBSL extended deadline to achieve enhanced minimum capital levels was deferred for licensed banks, which are yet to meet the minimum capital requirement of end of 2022, until the end of 2023.

However, the CBSL warned that banking sector stability may be threatened by rising challenges in maintaining its capital ratios above regulatory minimum levels and a substantial deterioration in capital buffers due to the impact of adverse macroeconomic conditions.

“Although the liquidity positions of banks remained above the minimum regulatory requirements during
the eight months ending August 2022, the prevailing extraordinary developments including the debt
standstill have affected the liquidity position of banks,” it said.