Approval of pension for Central Bank Governors

Thursday, 9 September 2021 00:33 -     - {{hitsCtrl.values.hits}}

I read with interest and deep surprise the news item relating to the approval of a payment of a pension by the Monetary Board of which the Governor is the Chairperson, to persons who held the post of Governor of the Central Bank. It is my view that in terms of section 12 (3), the Governor is entitled only to a salary and other benefits determined by the President and set out in the letter of appointment.  

Section 10 (b) of the Monetary Law Act refers to a payment of a pension to employees appointed by the Monetary Board, there’s no provision in the Monetary Law Act which enables the Monetary Board to approve a pension to a Governor or former Governor.  Such an action would be ultra-vires of the Monetary Law Act, further it would be improper for the Monetary Board of which the Governor is the Chairperson to approve such a payment. 

Trust the following two sections quoted below would be of relevance to appreciate the above view expressed.


10. For the purposes of the exercise of its powers, duties, functions, and responsibilities under this Act, the Monetary Board – 

(a) may, subject to the provisions of section 22 and section 23, appoint such officers and servants as the board may consider necessary and remove them from office or dismiss them, and may fix the salaries or wages, or other remuneration, of such officers and servants, and may prescribe their conditions of service;

(b) may establish and regulate pensions or provident funds or schemes for the benefit of officers and servants and their dependents and nominees, and may make contributions to any such fund or scheme. (bb) may, notwithstanding the provisions of paragraph

(c) of section 117, grant loans and advances, for housing purposes, to officers and servants of the Central Bank on the mortgage of, or otherwise on the security of, immovable property; 

(c) may make such rules and regulations as the board may consider necessary in relation to any matter affecting or connected with or incidental to the exercise, discharge, or performance of the powers, functions, and duties of the Central Bank; and

(d) may utilise the funds of the Central Bank for the purpose of meeting all expenditure incurred by the board in the management, administration, and operation of the bank and in the exercise, performance, and discharge of powers, functions, and responsibilities of the bank under this Act. 

12. (1) The Governor of the Central Bank shall be appointed by the President on the recommendation of the Minister in charge of the subject of Finance; 

(2) The Governor shall devote his full professional time to the business of the bank; and accordingly the Governor shall not accept or hold any other office or employment whatsoever, whether public or private, and whether remunerated or not: Provided, however, that nothing in the preceding provisions of this subsection shall be deemed to prevent the Governor from accepting or holding any academic office or position or any office or position in an institution or organisation, established for the purpose of carrying on research in the subjects of economics, money, banking, statistics and finance, or from being appointed to be or acting as a member of any commission constituted under the Commissions of Inquiry Act for the purposes of any inquiry relating to monetary, banking, financial or general economic matters or questions affecting the national welfare of Sri Lanka, or of any council, committee, or other body investigating or examining, or advising upon, any such matters or questions. 

(3) The Governor shall receive such salary as may be fixed by the President on the recommendation of the Minister in charge of the subject of Finance. 


An ex-Central Banker