As enacted

Contents

Central Bank of Sri Lanka Act 2023 · As enacted · Part V · Monetary and Other Operations

36. Liquidity assistance to financial institutions

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

(1)

In exceptional circumstances, the Central Bank may, on such terms and conditions as the Governing Board determines, grant liquidity assistance to a financial institution, or for its benefit-

(a)

under such rate as the Governing Board may determine which shall be above the prevailing market rate; and

(b)

for a period not exceeding a period of ninety-one days that may be renewed following a decision by the Central Bank for another period not exceeding a period of ninety-one days.

(2)

The Central Bank shall provide such financial assistance on the basis of a programmme specifying the remedial measures:

Provided however, no such commitment shall be made by the Central Bank unless such financial institution, in the opinion of the Governing Board, is solvent and can provide adequate collateral to support the loan, and the request for financial assistance is based on the need to improve liquidity.

(3)

The renewal of credit facilities granted under subsection (1) shall, after the initial ninety-one days, require a Government guarantee in writing securing their repayment.

The maximum renewal period shall be ninety-one days upon which the credit operations shall be repaid.

(4)

The Governing Board shall determine the type and minimum value of the collateral to be deposited or provided for to secure credit operations granted or renewed under this section.

(5)

If the Central Bank discovers that the assisted financial institution did not implement the remedial measures specified in subsection (2), or that such measures did not achieve the results intended, the Central Bank shall take appropriate measures including the administrative measures provided for in section 107.

(6)

Notwithstanding anything to the contrary in the preceding provisions of this section, the Central Bank may, if it considers that financial stability issues are at stake and to avoid a disturbance in the financial system, at its own discretion and on such terms and conditions as the Governing

Board determines including the viability of the financial institution in the context of a restructuring or resolution plan, provide liquidity support in exceptional circumstance to a financial institution for a maximum period of one hundred and eighty days in cases where the Government has, for the sake of public interest, provided to the Central Bank an unconditional and irrevocable guarantee for any losses incurred by the Central Bank from the loan.

Part VI

Foreign Exchange Operations and International Reserves

Read on from Part VI

Part VII

Currency and Legal Tender

Read on from Part VII

Part VIII

Payment and Settlement Systems

Read on from Part VIII

Part IX

Supervision and Resolution of Financial Institutions

Read on from Part IX

Part X

Macroprudential Authority

Read on from Part X

Part XI

Financial System Oversight Committee

Read on from Part XI

Part XII

Information Exchange with Financial Sector Authorities

Read on from Part XII

Part XIII

Statistics and Information

Read on from Part XIII

Part XIV

Relationship with the Parliament, the Government and the Public

Read on from Part XIV

Part XV

Credit Operations

Read on from Part XV

Part XVI

Financial Provisions

Read on from Part XVI

Part XVII

Internal and External Audits

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Part XVIII

General Provisions

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Part XIX

Repeals and Savings

Read on from Part XIX