Sri Lanka Ups Bank Capital Requirement to 2bn. Unlisted Private Banks to be Listed on Colombo Bourse

08th September 2010, www.lankabusinessonline.com

Sri Lanka will increase minimum capital requirements of banks to increase their resilience to shocks and also require unlisted private banks to list on the Colombo bourse, the Central Bank said.

Existing commercial banks will have to increase their minimum capital to three billion rupees by end-2011, and further raise it to four billion rupees by end-2013 and five billion rupees by end-2015.

Existing licensed specialised banks will have to raise their minimum capital to two billion rupees by end-2011, 2.5 billion rupees by end-2013 and three billion rupees by end-2015.

The Central Bank said in a statement its Monetary Board decided to increase the minimum capital requirement of licensed banks "with a view to promoting the existence of strong banks that are resilient to internal and external shocks."

The minimum capital requirement of new licensed commercial banks will rise to three billion rupees in 2010, four billion rupees in 2012 and five billion rupees by 2014.

The minimum capital requirement of new licensed specialised banks will increase to two billion rupees in 2010, 2.5 billion rupees in 2012 and three billion rupees by 2014.

"Increased capital will further provide a cushion for banks to enhance their contribution to the new growth sectors of the economy and to absorb any unexpected losses," the Central Bank said.

Unlisted locally incorporated private banks will be required to list in the Colombo Stock Exchange by December 31, 2011.

This was to meet "the need for enhancing the ability of banks to raise additional capital in a more transparent manner and further improving governance through market discipline," the Central Bank said.