Business Times

CB extends capital requirement deadline for banks

By Duruthu Edirimuni Chandrasekera

The Monetary Board (MB) of the Central Bank (CB) has decided to grant a ‘final’ extension of six months for Licensed Commercial Banks (LCB) to comply with the current minimum capital requirement of Rs. 2.5 billion, according to a CB source.

“The timeline for the minimum capital adequacy requirement ended on Thursday, but at the MB meeting with the bank CEOs on November 24, the regulator decided to grant them six months more till June to comply with it,” a CB official told Business Times.

He said the circular with regard to the extension was sent on December 21 to about four LCBs which are non-compliant as of now with this requirement, but declined to say who they are. He added that CB wants to grant more time to these LCBs as they are working towards getting the Rs. 2.5 billion minimum capital. “They too requested for this six month period,” he said.

Banking analysts said the four banks in which extensions have been requested are Muslim Commercial Bank, Union Bank, Pan Asia and Public Bank Berhad. The country’s financial system comprises 23 LCB and 15 licensed specialised banks, 32 registered finance companies and 20 specialized leasing companies, two main contractual savings institutions and a large number of micro-finance institutions.

In terms of markets, money, foreign exchange, government securities and capital markets are the significant ones. The total assets of the financial system accounts for 68 % of the total financial sector assets while continuing to hold a dominant position in the financial sector.

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