On Mar. 26, SRI CB issued directions on large exposures of banks.
SRI CB issued directions on large exposures of licensed banks, to mitigate the potential credit concentration risks and ensure safety and soundness and public confidence.
These directions shall be applicable to every licensed bank incorporated in Sri Lanka and every licensed bank incorporated or established outside Sri Lanka.
Large Exposures
Maximum limit on large exposures of a licensed bank to an individual borrower or to a group of connected borrowers shall not exceed 25% of licensed bank's tier 1 capital.
The sum total of the large exposures to any borrowers shall not exceed 55% of total exposures of licensed bank to all borrowers as at the end of the preceding quarter.
Directions outline exclusions of exposures, review of exposures, governance framework for monitoring large exposures, and transitional arrangements for existing borrowers.
Reporting Requirements
Licensed banks shall submit details of large exposures to the Director of Bank Supervision in line with these directions, as at end of each quarter from Sep. 30, 2024.
They must also submit measures taken to comply with these directions as at end of each quarter until the effective date of these directions.
Effectiveness
Licensed banks shall implement these directions on a compliance standalone basis commencing Jan. 1, 2026, and on a consolidated basis commencing Jan. 1, 2030.
