ECONOMYNEXT – Banks in Sri Lanka have been ordered to delay dividends and foreign banks profit to halt profit repatriation until the 2020 accounts have been audited, and cut some spending in a bid to conserve capital and liquidity.
Banks have also been asked as far as possible to cut spending on advertising, training, business promotions, gift schemes, entertainment, sponsorship and traveling, until June 2021 and be careful in capital expenditure.
“Every licensed commercial bank incorporated or established in Sri Lanka shall defer payment of cash dividends until the financial statements for the year 2020 are finalized and audited by its External Auditor,” the central bank said in a direction.
“Every licensed commercial bank incorporated outside Sri Lanka shall defer repatriation of profits no already declared for years 2019 and 2020 until the financial statements for the year 2020 are finalized and audited by its External Auditor.”
Banks have also been ordered not to buyback shares, stop raising salaries of executives and directors until June 2021.
Sri Lanka’s bad loans have been rising amid a Coronavirus pandemic and over a quarter of a loan book of banks are under moratoriums. Regulators in many countries have taken measures to conserve capital of banks.
At the moment loan loss rules are relaxed.
After money printing pressured the currency, Sri Lanka has slapped import controls and also tightened exchange controls. (Colombo/Jan21/2021)