Banking Industry: Bankig System of Sri Lanka

Sri Lanka has a fairly well-diversified banking system, which includes the Central Bank of Sri Lanka (CBSL), two large state-owned commercial banks (Ceylon Bank and People’s Bank), eleven private domestic commercial banks, thirteen foreign banks, a national savings bank, a regional development bank, two housing banks, and three licensed specialized banks. Citibank N.A. is the only U.S. bank operating in Sri Lanka. The domestic commercial banks operate branches throughout the island. All commercial banks operate foreign currency banking units and conduct off‑shore business and finance projects approved by the BOI. The Central Bank is responsible for regulation and supervision of Sri Lanka's banking system. The legal framework consists of the Monetary Law Act and the Banking Act. The Central Bank is empowered to issue detailed directives to the commercial banks. In 1993, Sri Lanka adopted the Basel Accord capital guidelines for commercial banks. Sri Lanka adopted Basel III capital standards in 2017 and capital requirements for Sri Lankan banks have increased. According to the Central Bank the banking sector maintained capital ratios at a comfortable level in 2017. However, rating agencies estimate that some large banks will require substantial fresh capital to meet full Basel III compliance by 2019. The Central Bank has requested banks to enhance minimum capital requirements by 31 December 2020.

Financial Sector in Sri Lanka includes;

banking sector
Non- Bank Finance and leasing Sector
Insurance Sector
Primary Dealers
Money brokering Industry
payment and settlement System
Micro Finance Sector

Banking sector

The banking sector in Sri Lanka, which comprises Licensed Commercial Banks (LCBs) and Licenced Specialised banks (LSBs), dominates the financial system and accounts for the highest share of the total assets in the financial system. Banks play a critical role within the Sri Lankan financial system, as they are engaged in provision of liquidity to the entire economy, while transforming the risk characteristics of assets.
The banking sector in Sri Lanka accounts for almost 60% of the assets in financial sector.

The Central Bank issues banking licenses for two categories of banks