Sri Lankaâ€™s central bank tightens supervision of financial groups
ECONOMYNEXT – Sri Lanka’s central bank said it had entered into agreements with capital markets and insurance sector regulators to improve monitoring of financial groups using consolidated risk-based supervision to assess any weaknesses within them.
“Consolidated supervision is an essential tool for supervising financial groups,” a statement said.
“It involves assessment of group-wide risks that may emanate from relationships among members of a corporate group operating across different financial sub-sectors.”
Group-wide consolidated supervision of such institutions is necessary in order to evaluate and assess contagion and reputation risks posed by such entities to the financial system and to contain systemic risk, the central bank said.
The banking regulator had entered into a Memorandum of Understanding with the Securities and Exchange Commission of Sri Lanka and the Insurance Regulatory Commission to conduct effective consolidated risk-based supervision.
The central bank will be the lead supervisor in consolidated supervision.