Central Bank to take action against eight banks

The Monetary Law Act Order No. 02 of 2019 on “Enhancing Efficiency of the Transmission of Recent Policy Decisions to Rupee Denominated Market Lending Rates” required, inter alia, every licensed commercial bank (LCB) to reduce their weekly Average Weighted Prime Lending Rate (AWPR)  by at least 250 basis points by 27 December 2019, compared to their AWPR published by the Central Bank of Sri Lanka as at 26 April 2019 in the Weekly Economic Indicators publication. This shall not apply to LCBs, whose AWPR reaches or falls below 9.50 per cent per annum as at the date of this Order or anytime thereafter. The Central Bank observes that several LCBs have complied with the above Order, and in particular, some LCBs have reduced their AWPR sharply during the week ending 27 December 2019 from the previous week ending 20 December 2019 to meet this regulatory requirement. Accordingly, the overall weekly AWPR has declined by 230 basis points from 12.24 per cent as at 26 April 2019 to 9.94 per cent as at 27 December 2019. This is the first time since 29 April 2016 that AWPR has declined to single digit levels. As per the Order, any LCB shall not increase its AWPR, from the reduced level, and it is expected that market lending rates, particularly those linked to AWPR will continue to decline in the period ahead, with regular repricing. Nevertheless, it is also observed that People’s Bank, Commercial Bank of Ceylon PLC, Indian Overseas Bank, MCB Bank Ltd, Public Bank Berhad, Standard Chartered Bank, Amana Bank PLC and Axis Bank Ltd2 have failed to comply with the Monetary Law Act Order No. 02 of 2019. The CBSL intends to take appropriate measures in relation to these banks, as well as those licensed banks that have not met with the other provisions of the Order, to ensure that the general public continues to benefit from an efficient transmission of recent policy decisions through the financial system.

The post Central Bank to take action against eight banks appeared first on Adaderana Biz English | Sri Lanka Business News.

adaderana business

Post a Comment

Previous Post Next Post