Central Bank presses ahead with financial sector consolidation and resolution reforms

Friday, 9 January 2026 00:30 - - {{hitsCtrl.values.hits}}

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe yesterday said its efforts to build a more resilient and stable financial sector will continue under the Master Plan for the consolidation of banks and finance companies, with a strong focus on long-term sustainability and systemic stability.

Delivering the annual policy address, he said the CBSL has commenced enhanced monitoring of finance companies based on scores achieved under the revised Phase II assessment framework. “These measures are aimed at improving financial stability, operational efficiency, and risk management standards across the non-bank financial sector,” he added.

Dr. Weerasinghe noted that consolidation will enable banking and financial institutions to achieve the scale and balance sheet strength required to support large-scale and complex investments, which are critical to boosting investment activity and economic growth in the country. “Consolidation is also expected to facilitate greater investment in technology, promote financial inclusion, and foster healthy and sustainable competition within the financial system,” he said.

Reflecting on the 2022 economic crisis, the Governor pointed out that the turmoil highlighted the urgent need for a robust and effective financial sector resolution framework. “In response, significant progress was made during 2025 to strengthen Sri Lanka’s resolution framework, with particular emphasis on enhancing institutional preparedness to manage distressed financial institutions,” he outlined.

He said these initiatives are expected to be completed in 2026, in line with international best practices. “Once implemented, the strengthened resolution framework is expected to reinforce financial system stability and ensure the orderly and timely resolution of troubled banks and finance companies, thereby safeguarding depositor confidence and overall financial sector resilience,” Dr. Weerasinghe said.