Cabinet greenlights proposed Banking (Special Provisions) Act

The Cabinet greenlight has been granted to draft the Proposed Banking (Special Provisions) Act that aims to strengthen the bank resolution framework, under the Crisis Management Framework of Financial Institutions Regulated by the Central Bank on a
priority basis.

President Ranil Wickremesinghe, in his capacity as the Finance, Economic Stabilisation and National Policies Minister, sought the approval of the Cabinet of Ministers to advise the Legal Draftsman to prepare the bill based on the initial draft bill prepared by the Central Bank.

As the International Monetary Fund and World Bank have highlighted the importance of strengthening the resolution framework to strengthen the financial sector safety nets, the proposed Banking (Special Provisions) Act is to be drawn up as a supplement to Banking Act No. 30 of 1988, introducing provisions for resolution of licensed banks, deposit insurance and winding up/liquidation of licensed banks. 

Justice, Prisons Affairs and Constitutional Reforms Minister Wijeyadasa Rajapakshe noted that the proposed act would be followed by a comprehensive new Banking Act, replacing Banking Act No. 30 of 1988 at a later stage, as it is difficult to enact a new complete banking law in a short period.