Business Times

Mandatory deposit insurance, drop in performing loan loss provisions by CB

Depositors will be entitled to benefits of the Central Bank’s (CB) mandatory deposit insurance scheme from next January, while the regulator has reduced commercial banks ’ loan loss provisions by 0.5%, CB officials said.

Ajith Nivard Cabraal

“Under the provisions of the Monetary Law Act with effect from Friday we implemented this as the Sri Lanka Deposit Insurance Scheme (SLDIS). The initial capital of the scheme of Rs. 1.1 billion (approximately) will be provided by the CB and while member banks and finance companies will participate in this scheme on a mandatory basis from 1st October 2010, depositors will be after 1st January 2012,” Ajith Nivard Cabraal Governor CB told the media on Thursday.

SLDIS’ premium to be levied on eligible deposits will range between 0.10% and 0.15% per annum and will be required to be paid by member institutions on a monthly/quarterly basis. all licensed banks and registered finance companies. All deposits excluding deposits of member banks and finance companies, Government of Sri Lanka, shareholders, directors, key management personnel, other related parties, deposits held as collateral against any accommodation granted and deposits falling within the meaning of abandoned property in terms of the Banking Act and dormant accounts in terms of the Finance Companies Act, will be considered as eligible deposits under SLDIS, a CB statement said.

It said in the event the licence or registration of a member institution is suspended or cancelled by the Monetary Board, depositors will be compensated up to a maximum of Rs. 200,000 per depositor. “All the premia will be managed by the Monetary Board, but SLDIS will be distinctly separate from the CB while its liability will be limited to the extent of the balance in the fund,” Mr. Cabraal noted.

He also said that the careful assessment of the current financial landscape at present, suggests that the risk of any potential downturn in the domestic and global economic activities has substantially abated, which is why the CB has decided to reduce the general provision on performing loans and advances and credit facilities from the current 1% to 0.5% by December 31.

The banking sector saw an 11.6% credit growth in August. According to CB data, this sector is so far accountable for Rs 2.3 trillion deposits and Rs 1.6 trillion loans.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
New law to replace BOI Act
Value is key for SL over others: Taj Hotels MD
CB to relax exchange control rules
Top securities regulator visits Colombo
Budget: Growth with equality-urges Colombo business leader
Sri Lanka to consider reptile exports to Germany
Comment -Budget: Onus on taxes
Feature - Friday Forum outlines the path to national unity and reconciliation
Tourism strategies at provincial level
CPM annual conference slated for October 11
Gotabaya outlines war-winning strategy now applicable for economic war
250,000 computers dumped in Sri Lanka every year
India setting up 1,500 universities, China creates one every week
Design for economic growth
Leo Burnett’s Ranil wins a Global Medal of Merit from IAA
Lankaputhra Bank’s non-performing loans increase
Saberion offers alternative to commission based bookings
Janashakthi introduces Sri Lanka’s first 24-hour vehicle breakdown policy
Phoenix Jt. MD at O&M New York
Add 1% for North / East development in 2011 budget: Business leader
US Business Leaders meet President in NY
Central Bank $1 bln bond offer exceeds $6 bln in 14 hours
SLT's IPTV investment and ADSL services
Sri Lanka to use nuclear energy for commercial purposes
Agni Capital leads in driving foreign investments to SL
Fitch revises SLT outlook
Dedicated IPR UNIT of CID soon
Central Bank directs The Finance Company to seek new investors
Government introduces new procurement procedure for state institutions
Plenty Foods wins silver award at Farmer awards event
Ceylinco Life to present Rs 8.4 mln in new scholarships at 10th Pranama event
Sri Lanka's first 3D mobile game 'Colombo Ride 3D' opens in Oct.
Costs from interest free credit cards offers come from merchant’s commissions
Shortage of shares in Colombo market prompts SEC action
Microsoft EDI system for Brandix and Marks & Spencer
Eagle Logistics turns five
Dilmah founder felicitated as 2010 Brand Icon
Mandatory deposit insurance, drop in performing loan loss provisions by CB
Multi Finance to list on the Colombo Stock Exchange
Stepping up on Corporate Governance practices key to investment
SEC in a move to bring commodity exchange, exchange traded funds, unit trusts in 2010
CSE boom hasn’t reached remote areas; banks still rule
SEC prepares takeovers-mergers law
SEC wants to harmonise regulation with the region
SEC, CB rules bring in new business for banks
Hayleys and employees donate IT Centres to Northern schools
SMB Leasing to raise Rs 581 million from rights issue
NDB Bank launches an island-wide Savings Drive


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution