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CBSL imposes restrictions on standing facilities to commercial banks
The Central Bank of Sri Lanka has restrictions on the availability of the Standing Facilities to Licensed Commercial Banks (LCBs,) to support the reactivation of the domestic money market and encourage banks to make transactions among themselves.
From January 16, 2023, LCBs will only be allowed to use the Standing Deposit Facility Rate five times per calendar month.The Standing Deposit Facility Rate currently stands at 14.5 percent.The Central Bank increased both the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) in April 2022 to control the country’s inflation.
Given below is the Central Bank statement: “The liquidity deficit in the domestic money market, which remained significantly high during the first half of 2022, declined in the latter part of 2022. However, in spite of the improvements in money market liquidity conditions, market interest rates continued to remain high, partly due to subdued activity in the domestic money markets. At the same time, it has been observed that several Licensed Commercial Banks (LCBs) have continued to depend excessively on the overnight Standing Facilities under Open Market Operations (OMOs) of the Central Bank without considering market-based funding options to address their structural liquidity needs. Such LCBs have not indicated any signs of taking remedial actions to reduce the over dependence on overnight facilities offered by the Central Bank, which are available to be used as fall back options after utilizing all other funding options. Such behaviour of LCBs affects the efforts of the Central Bank to reactivate the money markets, primarily the interbank call money market and the repo market, while posing a threat to smooth channeling of funds in the economy with a possibility of clogging the payment and settlement systems.
“Accordingly, as a part of unprecedented policy measures taken since April 2022 aiming at restoring overall macroeconomic balance, including preserving the stability of the monetary and financial sector and to address the above mentioned risks, the Central Bank of Sri Lanka has decided to impose restrictions on the availability of the Standing Facilities to LCBs under the OMOs. Hence, with effect from 16 January 2023, the Standing Deposit Facility (SDF), the overnight deposit facility that allows LCBs to park excess liquidity and earn interest, will be limited to a maximum of five (05) times per calendar month. At the same time, the Standing Lending facility (SLF), which is the collateralized facility provided for LCBs to fulfill any further shortage of the liquidity requirements from the Central Bank at the end of the day, would also be limited to 90% of the Statutory Reserve Requirement (SRR) of each LCB at any given day.
These measures have been implemented after carefully considering the current and expected developments in the domestic money market as well as the behaviour of LCBs in terms of the utilization of the Standing Facilities. The imposition of the limitations on the Standing Facilities is expected to reduce over dependence of LCBs on the overnight facilities offered by the Central Bank and support the reactivation of the domestic money market, which remained nearly inactive for the last few months, while encouraging LCBs to transact among themselves. These measures would also eliminate unhealthy competition for deposits among financial institutions and would be instrumental in inducing a moderation in the market interest rate structure (of both deposit and lending interest rates) in the period ahead along with improving market liquidity conditions, which will help to restore stability of the Sri Lankan economy, while preserving stability of the financial system.”
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SC rejects petitioners’ request for full bench
The Supreme Court yesterday rejected a request that the petitions challenging the 22nd Amendment to the Constitution be heard by a full bench of the Supreme Court.
Rejecting the request, Chief Justice Preethi Padman Surasena said the consideration of the petitions would proceed before the five-judge bench.
Appearing on behalf of one of the petitioners, President’s Counsel M. A. Sumanthiran made the request when the petitions were called for hearing yesterday before a five-judge bench of the Supreme Court, headed by Chief Justice Surasena.
President’s Counsel Saliya Pieris, Ali Sabry, Geoffrey Alagaratnam, Eraj de Silva, Srinath Perera, Anura Meddegoda, and Maithri Gunaratne, along with other counsel appearing for several other petitioners, also made the same request.
Solicitor General Viraj Dayaratne, appearing on behalf of the Attorney General, pointed out that the authority to determine the composition of a judicial bench rested with the Chief Justice. Refering to Article 132(3) of the Constitution, the Solicitor General argued that the discretion to determine the number of judges on a bench lay with the Chief Justice and that no other party had the authority to interfere in the matter.
Counsel including President’s Counsel Nigel Hatch, appearing for an intervening petitioner, also made submissions pointing out that the discretion to determine the composition of a bench rested with the Chief Justice.
News
Seven years RI for former Civil Aviation Minister Piyankara Jayaratne
The Colombo High Court yesterday sentenced former Civil Aviation Minister Piyankara Jayaratne to seven years’ rigorous imprisonment after finding him guilty of a corruption charge involving a Rs. 320,000 payment made by state-owned SriLankan Catering Ltd.
Colombo High Court Judge Mohamed Mihail delivered the verdict following a lengthy trial into the transaction, which dates back to the 2014 May Day rally of the United People’s Freedom Alliance (UPFA).
The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) had indicted Jayaratne, alleging that he abused his position as Civil Aviation Minister by influencing an executive officer of SriLankan Catering to release the funds.
According to the indictment, the money was paid from SriLankan Catering’s accounts to a private catering service in Marawila to provide lunch for Jayaratne’s political supporters who attended the May Day rally.
CIABOC has alleged that the payment caused a loss to the state and constituted an offence of corruption.
Jayaratne was serving as Civil Aviation Minister at the time.
News
40 professional organisations and TU oppose proposed 22A
Representatives of 40 professional organisations and trade unions have jointly opposed the proposed 22ned Amendment to Sri Lanka’s Constitution, saying provisions extending the retirement age of judges could threaten judicial independence and the rule of law.
The organisations, representing various professional and trade union bodies, met at the Bar Association of Sri Lanka (BASL) on Monday (31) and adopted a joint statement endorsing the BASL’s opposition to the proposed amendment, BASL said in a statement.
Full text of BASL statement: Representatives of 40 professional organisations and trade unions from across Sri Lanka gathered at the Bar Association of Sri Lanka (BASL) on Monday (31) and adopted a Joint Statement in support of the position of the Bar Association of Sri Lanka unequivocally opposing the proposed Twenty-Second Amendment to the Constitution.
These organisations included the Federation of University Teachers’ Associations (FUTA), The Government Medical Officers’ Association (GMOA), The Railway Station Masters’ Union, The Graded Principals’ Association, The Academy of Health Professionals Sri Lanka, The College of Medical Laboratory Science Sri Lanka, The Sri Lanka Association of Medical Laboratory Scientists, The Locomotive Officers’ Association, The Sri Lanka Association of Government Medical Laboratory Technologists, The Government Printer’s Union, The Postal Trade Union, The Government Nursing Association, All Ceylon Management Service Association and further together with twenty-four other professional organisations and trade unions.
By adopting the Joint Statement, the participating organisations and trade unions endorsed and extended their support to the BASL’s principled position that the proposed extension of the retirement age of Judges, including Judges of the Supreme Court and the Court of Appeal, poses a direct threat to the independence of the Judiciary and, consequently, to the Rule of Law, Democracy and the Sovereignty of the People.
The Joint Statement emphasises that judicial power forms an integral part of the sovereignty of the People and that the constitutional provisions governing the retirement age of Judges of the Superior Courts are contained within the Part of the Constitution dealing with the “Independence of the Judiciary”.
It also refers to the Special Determination of the Supreme Court in respect of the Inland Revenue (Amendment) Bill, SC/SD/64–71/2022, in which the Court held that any constitutional amendment to the retirement age or period of office that directly or indirectly impacts incumbent Judges would impinge upon the independence of the Judiciary and violate Article 3 of the Constitution, thereby requiring approval by the People at a referendum.
The signatories further noted the significant opposition already expressed by religious institutions, judicial and professional bodies, and national and international legal organisations, including the Maha Sangha, the Catholic Bishops’ Conference in Sri Lanka, the Church of Ceylon, the BASL, the Judicial Service Association, the Commonwealth Lawyers Association, LAWASIA, the International Association of Judges, the United Nations Special Rapporteur on the Independence of Judges and Lawyers, and the French National Bar Council.
The participating professional organisations and trade unions unanimously resolved:
1. To unequivocally oppose the proposed Twenty-Second Amendment to the Constitution Bill;
2. To call upon the Government to withdraw the proposed Constitutional Amendment immediately;
3. To urge the Government to prioritise, without further delay, the filling of all existing vacancies in the Superior Courts; and
4. If the Government nevertheless intends to proceed with the proposed Amendment, to call upon it to refer the matter directly to the People for determination at a referendum.
The adoption of this Joint Statement demonstrates the united opposition to any measure that may undermine judicial independence. The signatories reaffirmed their collective commitment to safeguarding the independence of the Judiciary, the Rule of Law, Democracy and the Sovereignty of the People of Sri Lanka.
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