20. Replacement of section 93 of the principal enactment

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

Section 93 of the principal enactment is hereby repealed and the following section substituted therefor:–

93. (1) The Monetary Board shall, in order to limit the volume of money created by the credit operations of the financial system, require commercial banks and such other financial institutions operating in Sri Lanka as may be prescribed by the Monetary Board (in this Part referred to as the “prescribed financial institutions”) to maintain reserves against their deposit liabilities and such of their other financial liabilities as the Monetary Board may consider necessary and shall, for that purpose, prescribe the classes of deposit liabilities and the categories of other financial liabilities against which reserves are required to be maintained.

‘Reserve requirements.

(2)

The reserves required to be maintained by a commercial bank or a prescribed financial institution under subsection (1), shall be proportionate to the volumes respectively, of each class of its deposit liabilities and each category of its other financial liabilities and shall, subject to subsection (4), take the form of rupee deposits in the Central Bank.

(3)

The accounts maintained at the Central

Bank by prescribed financial institutions under subsection (2), shall be maintained only for the purpose of keeping the rupee deposits required to be maintained as reserves by such financial institutions.

(4)

The Monetary Board may in the interest of the national economy and the banking and financial systems of the country, permit the maintenance of any part of the reserves required to be maintained under subsection (1), in the form of assets other than rupee deposits in the

Central Bank.

(5)

In this Part –

“financial business” in relation to a financial institution means the accepting of money in any form from the public, in the ordinary course of business, by way of deposit or by the issue of bills of exchange, promissory notes, bonds, certificates, notes, commercial paper or other similar instruments by means of which money is raised from the public, and the use of that money, in whole or in part, for the grant of loans or making that money available to third parties or for the benefit of third parties, as a business ;

“financial institution” means a licensed specialised bank as defined in the

Banking Act, No. 30 of 1988, or a finance company as defined in the

Finance Companies Act, No. 78 of 1988, and includes any person or body of persons carrying on financial business ;

“other financial liabilities” in relation to a licensed commercial bank or a prescribed financial institution, means liabilities (other than deposit liabilities)

incurred by any such bank or financial institution by the acceptance of money in any form from the public, in the course of its business, by the issue of bills of exchange, promissory notes, bonds, cretificates, notes, commercial paper or other similar instruments by means of which money is raised from the public.’.

Read on from s 21