Provisions in Monetary Law Act relating to removal of an appointed member of the Monetary Board

By Legal Eye

I have been reading many newspaper items regarding the resignation of Monetary Board members, Nihal Fonseka and Dr. Dushni Weerakoon. In these news items it has been stated that the appointed members to the Monetary Board cannot be removed during their term of office. Since such assertions are factually incorrect, I set out below the relevant provisions contained in the Monetary Law Act applicable to this matter.

16. Removal from office of Governor or appointed member. [§.8, 32 of 2002] 

The President may, on the recommendation of the Minister in charge of the subject of Finance, remove the Governor or an appointed member from office– 

(a) if he becomes subject to any disqualification mentioned in section 11; or 

(b) if he becomes permanently incapable of performing his duties; or 

(c) if he has done any act or thing which, in the opinion of the President is of a fraudulent or illegal character or is manifestly opposed to the objects and interests of the Central Bank; or

(d) in the case of the Governor, if he acts in contravention of subsection (2) of section 12.

11. Disqualification for appointment as Governor, or as member of the Monetary Board. [§.4, 32 of 2002]

(1) A person shall be disqualified for appointment as the Governor of the Central Bank if – 

(a) he is a Member of Parliament, or a member of any Provincial Council or any local authority; or

(b) he is a public officer or judicial officer within the meaning of the Constitution of the Democratic Socialist Republic of Sri Lanka, or holds any office or position (other than an academic position) either by election or appointment, for which salary or other remuneration is payable out of public funds or the funds of any local authority; or 

(c) he is a director, officer, employee or shareholder of any banking institution (other than the Central Bank).

(2) A person shall be disqualified for appointment as a member of the Monetary Board under paragraph (c) of subsection (2) of Section 8 if – 

(a) he is a Member of Parliament, or a member of any Provincial Council or any local authority; or 

(b) he is a public officer or judicial officer within the meaning of the Constitution of the Democratic Socialist Republic of Sri Lanka, or holds any office or position (other than an academic position) either by election or appointment, for which salary or other remuneration is payable out of public funds or the funds of any local authority; or 

(c) he is a director, officer, employee or shareholder of any banking institution (other than the Central Bank) or any other institution supervised or regulated by the Central Bank.

12. Appointment, remuneration, &c. of Governor, Central Bank. [§.5, 52 of 1985]

(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.