The Central Bank of Sri Lanka (CBSL) yesterday shared new corporate governance regulations for licensed banks, aimed at reinforcing the accountability and resilience of the country’s banking sector.Â
Issued as Banking Act Directions No. 05 of 2024, these measures will take effect on January 1, 2025, replacing the previous 2007 guidelines.
The updated framework is designed to enhance oversight at licensed commercial and specialised banks, promoting responsible banking practices that prioritise depositor protection and sector stability. The move comes as part of CBSL’s broader strategy to align with international banking standards and address the growing complexity and risks in the financial system.
“The banking sector is dynamic, fast evolving and becoming increasingly complex, while being exposed to emerging risks, frauds and failures.Â
“Accordingly, a robust corporate governance framework that encompasses sound corporate culture and values, healthy composition of BOD, strengthened process of assessment of fitness and propriety and strong risk management and control functions is of paramount importance for the banking sector,†the CBSL said in a statement.
With deposits accounting for over 80 percent of the sector’s funding by the end of 2023, CBSL stressed the critical role of Boards of Directors and senior management in safeguarding depositor interests. The new regulations aim to foster a corporate culture centered on accountability, risk management, and ethical governance practices.
The reforms build on the recent Banking (Amendment) Act No. 24 of 2024, which introduced legal changes to strengthen corporate governance across the sector. They also align with global best practices, including guidelines from the Basel Committee on Banking Supervision, to address emerging challenges and governance failures seen internationally.
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