ECONOMYNEXT – Sri Lanka’s central bank ]has halted banks from declaring dividends and foreign banks from repatriating profits under new regulations which it said was to conserve liquidity amid a Coronavirus outbreak until December 2020.[/size]
“Licensed banks incorporated or established iu Sri Lanka shall refrain from declaring cash dividends not already declared for financial year 2019 and any interim cash dividends for financial year 2020,” the central bank said in a direction.
“Licensed commercial banks incorporated outside Sri Lanka shall refrain from repatriation of profits not already declared for financial years 2019 and 2020.”
Share buybacks have also been banned.
Wage or allowances to management or directors have also been banned.[/size]
The central bank has injected unprecedented volumes of money in to the banking system from late February before private credit fell, leading to a loss of credibility in the currency and downgrades.
The full statement is reproduced below:
3.4 Licensed banks shall refrain from increasing management allowances and payments to Board of Directors.
“3.5 Licensed banks shall exercise prudence and refrain to the extent possible from incurring non-essential expenditure such as advertising, business promotions, sponsorships, travelling and training. etc…”
3.6 Licensed banks shall exercise extreme due diligence and prudence when incurring capital expenditure, if any.”
2.2 These Directions shall come in to effect immediately and be applicable until 31 December 2020.
3.1 Licensed banks incorporated or established iu Sri Lanka shall refrain from declaring cash dividends not already declared for financial year 2019 and any interim cash dividends for financial year 2020.
3.2 Licensed commercial banks incorporated outside Sri Lanka shall refrain from repatriation of profits not already declared for financial years 2019 and 2020.
“3.3 Licensed banks shall refrain from buying-back its own shares.”
3.4 Licensed banks shall refrain from increasing management allowances and payments to Board of Directors.
“3.5 Licensed banks shall exercise prudence and refrain to the extent possible from incurring non-essential expenditure such as advertising, business promotions, sponsorships, travelling and training. etc…”
3.6 Licensed banks shall exercise extreme due diligence and prudence when incurring capital expenditure, if any.”