Unlisted Banks get 2011 end deadline:

Bank capital requirement increased

The Monetary Board of the Central Bank has decided to increase the minimum capital requirement of licenced banks, the Central Bank said yesterday. This aims to promote the existence of strong banks that are resilient to internal and external shocks. 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 decision was taken to provide much comfortable economic environment while ensuring a strong banking sector. “We have given them five years to accomplish the targets and we are confident that the bank will gradually improve their minimum capital requirement, Central Bank Governor Ajith Nivard Cabraal told Daily News Business.

The Monetary Board has also decided to require unlisted locally incorporated private banks to get listed in the Colombo Stock Exchange by December 31, 2011. There are only few unlisted locally incorporated private banks, Union Bank of Colombo, DFCC Vardhana Bank and SANASA Development Bank, which require to enter the capital market.

The listing of these banks will help to raise capital in a much transparent manner and further improving governance through market discipline. Previously the Central Bank revised the minimum capital requirement of licenced banks in 2005.

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