14. Insertion of new Part III in Chapter III of the principal enactment

The principal enactment is hereby amended by the insertion immediately after section 62, of the following :—

‘PART III

PAYMENT AND SETTLEMENT SYSTEMS

62A. (1) The Central Bank may establish and operate one or more systems—

for the transfer of funds by and between the Central Bank, commercial banks and such other institutions or persons that maintain a settlement account with the

for the transfer and settlement of scripless securities by and between the Central Bank and direct participants ;

for the settlement of payment obligations in respect of transfer and settlement of scripless securities under paragraph (b).

A system established under subsection (1) may be linked to another system in Sri Lanka or elsewhere for the clearing or settlement of payment obligations or securities.

The Central Bank may enter into agreements with the participants of a system established under subsection (1) and issue in writing to the participants of the system rules for the operation of the system.

Without prejudice to the generality of subsection (3), such rules may provide—

for the provision of intra-day credit against the collateral of securities to the participants and the conditions attaching to the provision of such credit ;

for the appointment of the Central Bank as a certification authority for the purpose of issuing certificates to participants under any law applicable to the appointment of certification authorities in respect of electronic signatures ;

for the formulation and adoption of a code of conduct for participants ;

for the authentication of transactions carried out electronically ;

for the Central Bank, if it considers necessary in the interest of the system, to cease or suspend the operation of the system, or to withdraw or suspend the privileges or rights of any participant or category of participants or to suspend or revoke the membership in the system of a participant ;

for the appointment of auditors or inspectors for the auditing or inspection of the operating systems of participants in respect of the settlement system ; and

for the payment of charges and fees to the Central Bank by the participants.

A payment or transfer made through a system established under subsection (1), is final and irrevocable—

in the case of a transaction involving a funds transfer only, upon the settlement account of the participant requesting the funds transfer being debited ;

in the case of a transaction involving a securities transfer only, upon the securities account of the participant requesting the securities transfer being debited ;

in the case of a transaction involving both, a funds transfer and a securities transfer, upon debiting the settlement account or the securities account of a participant requesting the funds transfer or the securities transfer as the case may be, whichever occurs earlier, and notwithstanding anything to the contrary in any other law, such payment or transfer shall not be required to be reversed, repaid or set aside nor shall any court, order such payment or transfer to be rectified or stayed.

Scripless securities issued under this Act or the Local Treasury Bills Ordinance or the

Nothing in subsections (5) and (6) shall affect any other legal right or remedy available to a person who has suffered any loss or damage by a payment, transfer or settlement effected through a system established under subsection (1).

Notwithstanding the provisions of any written law relating to the winding up of companies, if proceedings for the winding up of a participant of a system have commenced—

the Central Bank may do anything permitted or required by the rules of the system in order to net obligations incurred before or on the day on which the proceedings commenced ;

the obligations that are netted under the rules of the system shall be disregarded in the proceedings ; and

the netting made by the Central Bank and any payment made by the participant under the rules of the system shall not be voidable in the proceedings.

If proceedings for the winding up of a participant is commenced and a payment or settlement owed by such participant has been made as referred to in subsection (5) or (8), and if a payment or settlement of such funds or securities would have been void or voidable under any other written law if made outside the system, the liquidator of such participant may recover from the person to whose benefit such payment or settlement was made such amount as would have been recoverable if such payment or settlement had been made outside the system.

Without prejudice to the generality of the provisions of section 47, the Monetary

Where any transaction effected through a system established under subsection (1) is carried out electronically, such transaction shall not be denied legal effect, validity or enforceability solely on the ground that such transaction is carried out electronically or that the information relating to such transaction is maintained in the form of an electronic record, and such record may be tendered in evidence in proceedings before any court or tribunal in accordance with the provisions of Parts II and

Any or all of the functions referred to in subsection (1) may, be carried out by a body corporate authorised for the purpose by the

For the purposes of this section—