Banks welcome CBSL Governor’s assurances on anticipated Govt. announcement on DDR or DDO

The Sri Lanka Banks’ Association (SLBA) has welcomed the assurance by the Governor of the Central Bank of Sri Lanka (CBSL) Dr Nandalal Weerasinghe that financial sector stability will be maintained, and the clarifications provided by the Governor on the relevant process in this regard.

In a statement, the SLBA noted that the Dr Weerasinghe’s public announcement covered important issues, and included a categoric assurance that the forthcoming Domestic Debt Optimisation (DDO) or Domestic Debt Restructuring (DDR) will not impact financial system stability and will not in any way adversely affect depositors in banks or non-bank financial institutions.

The Central Bank Governor had also clarified that the five-day holiday for the banking sector was to afford a sufficient period of days for discussion of the DDO / DDR strategy within government and also provides an opportunity for reflection by the public and market participants, the SLBA said.

The Association also welcomed the Governor’s statement that the DDO/DDR strategy has to be announced and must follow the proper approval process from the Cabinet of Ministers, Committee of Public Finance and the Parliament via a debate, apart from having been discussed with the CBSL and Ministry of Finance.

“The Governor also mentioned that during the five-day holiday, banking services will be available for customers as usual via ATMs, online and other digital channels,” the SLBA noted, and pointed out that “Meanwhile, capital and liquidity ratios of the banks remain above the regulatory requirements and banks pay close attention to these indicators.”

The statement added that the SLBA represents all Licensed Banks in Sri Lanka and encourages cooperation among members and coordination of banking sector operations as required. “Within this ambit, a key aim is assisting in maintaining and developing a sound banking structure in Sri Lanka in accordance with policy and regulatory frameworks set by the Central Bank of Sri Lanka,” the Association said.