Central Bank of Sri Lanka
The Central Bank of Ceylon was established by the
Monetary Law Act (MLA) No.58 of 1949 and commenced operations on August 28,
1950. It was renamed the Central Bank of Sri Lanka (CBSL) in 1985.
The Central Bank was given wide powers to administer and regulate the
entire money, banking and credit system of the country. The founder governor of the
Central Bank of Sri Lanka was John Exter.
The
objectives of the Central Bank as specified in 1949 were;
·
The stabilisation of domestic monetary
values (maintenance of price stability).
·
The preservation of the par value or
the stability of the exchange rate of the Sri Lankan Rupee (maintenance of
exchange rate stability).
·
The promotion and maintenance of a high
level of production, employment and real income in Sri Lanka.
·
The encouragement and promotion of the
full development of the productive resources of Sri Lanka
These
four Objectives bringing down to two core
objectives in 2000.such as
·
The maintaining of
economic and price stability
·
The maintaining of
financial system stability
VISION
A credible and dynamic central bank contributing to the
prosperity of Sri Lanka
MISSION
Maintaining economic and price stability and financial
system stability to support sustainable growth through policy stimulus, advice,
commitment and excellence.
Non-Bank Finance and Leasing Sector includes Licensed
Finance Companies (LFCs) and Specialized Leasing Companies (SLCs). The Supervision
of Non-Bank Finance and Leasing Sector is conducted through Examinations,
Continuous surveillance, granting regulatory approvals, Issuance of directions
and prudential requirements, investigating into companies carrying on finance
business and accepting deposits without authority and investigating in to
public complaints. The directions, regulations and rules issued under the
provisions of the Finance Business Act (FBA) mainly cover minimum capital
adequacy, liquidity requirements, provisioning for bad and doubtful debts,
single borrower limits, limits on equity investments etc.
In the event of any non-compliance with the prudential
requirements, the FBA empowers the Monetary Board and Director of Supervision
of Non-Bank Financial Institutions (SNBFI) to take necessary corrective actions
such as penalty, business restrictions, license cancellation and further
investigation of books etc.
The primary function
of the central bank is to control the money supply in the economy. It is
responsible for issuing currency on behalf of the government. In addition to
this primary function, the central bank performs the following duties:
1. It receives the state
revenues, keeps deposits of various departments and makes payments on behalf of
the government.
2. It keeps the cash
reserves of the commercial banks, acts as a clearing-house for the inter-bank
transactions and as a lender of last resort. It supervises the commercial
banking system and ensures its smooth running.
3. It controls the money
and capital markets by changing the supply of money and thereby the rate of
interest. The objective is to keep equilibrium in these markets.
4. It is the custodian
of the foreign exchange. It has to keep a closer check on the external value of
the domestic currency and prevent its deterioration.
It is
the adviser to the government in all the monetary affairs. It is responsible
for the formulation and implementation of the monetary policy
