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As enacted
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Contents

Part III · Sri Lanka Deposit Insurance Scheme

51. Sources of funds of the Deposit Insurance Fund

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

There shall be credited to the Deposit Insurance

Fund –

(a)

the monies lying to the credit of the Deposit

Insurance Fund under the Sri Lanka Deposit

Insurance and Liquidity Support Scheme established under the laws for the time being in force, as at the appointed date;

(b)

the premia and penalties paid by member institutions;

(c)

the investment income and gains derived from the investments of the moneys in the Deposit Insurance

Fund;

(d)

recoveries of secured advances or loans granted to any member institutions under the Sri Lanka

Deposit Insurance and Liquidity Support Scheme established under the laws for the time being in force;

(e)

the sums from the recovery of compensation paid to depositors from and out of the assets of a member institution during the winding up proceedings instituted against such institution;

(f)

such sums as may be appropriated out of the abandoned property or dormant deposits of member institutions, as the case may be, which have been transferred to the Central Bank under the Banking

Act;

(g)

the moneys received as additional premia and penalties paid by the member institutions under this Part of this Act;

(h)

the borrowings from the Government or any international financial institution, as may be approved by the Central Bank; and

(i)

any other receipt from any other sources of income as may be approved by the Central Bank.

(2)

The Deposit Insurance Fund shall be utilized to make payments in respect of –

(a)

compensation to depositors of insured deposits of member institutions;

(b)

abandoned property or dormant deposits of member institutions lying to the credit of the Deposit

Insurance Fund;

(c)

repaying of any borrowings obtained from the

Government or any international financial institution; and

(d)

such operating expenses of the Scheme as may be determined by the Central Bank.

(3)

The Central Bank may require the Scheme to provide financing to effectively facilitate the resolution of a licensed bank through the transfer of assets and liabilities to a transferee or bridge bank, by way of paying any difference between such assets and liabilities transferred, or by issuing guarantee or providing indemnities for losses related to the transferred assets and liabilities:

Provided that, the total amount of financing provided under this subsection shall not exceed the amount of total compensation to be paid to the depositors of such bank under section 44, and such financing shall be subject to a confirmation by the Central Bank that, with the transfer of assets and liabilities, insured deposits shall be owed by a viable bank:

Provided further, that the holders of all classes of share capital and subordinated debt holders shall have absorbed, or will absorb, the losses.

(4)

(a)

The Central Bank shall have the right to recover from the licensed bank subject to resolution, the total amount of financing provided by the Scheme to such bank under subsection (3).

(b)

The amount to be recovered from the licensed bank to the Scheme under this subsection shall rank, pari passu with the insured deposits and claims of the Deposit Insurance

Fund arising from subrogation of rights of insured depositors under section 45.

Read on from s 52

Part IV

Financial Sector Crisis Management Committee

Read on from Part IV

Part V

Winding Up of Licensed Bank

Read on from Part V

Schedules