MONETARY LAW ACT

Arrangement of Sections

1. Short title.

CHAPTER I

ESTABLISHMENT OF THE MONETARY UNIT

2. The unit of monetary value.

3. The par value of the rupee.

4. The use of the rupee.

CHAPTER II

ESTABLISHMENT OF THE CENTRAL BANK TO ADMINISTER AND REGULATE THE MONETARY SYSTEM

PART I

THE CENTRAL BANK, ITS POWERS AND PURPOSES

5. Establishment and objectives of the Central Bank.

5A. Powers of the Central Bank and the Monetary Board in relation to section 69 A of the Inland Revenue Act, No. 4 of 1963.

6. Capital of Central Bank.

7. Place of business.

PART II

THE MONETARY BOARD

8. Constitution of Monetary Board.

9. Monetary Board to be a body corporate.

10. General powers of Monetary Board.

11. Disqualification for appointment as Governor or as member of the Monetary Board.

12. Appointment, remuneration of Governor of Central Bank.

13. Term of office of Governor and appointed member.

14. Remuneration of appointed member.

15. Alternate for appointed member.

16. Removal from office of Governor or appointed member.

17. Meetings of Monetary Board.

18. Attendance of certain officers at meetings of Monetary Board.

PART III

THE GOVERNOR AND DEPUTY GOVERNORS

19. General functions and duties of Governor.

20. Governor to be principal representative of Central Bank and Monetary Board.

21. Delegation of powers of Governor.

22. Appointment of Deputy Governors.

23. Disqualification and removal of Deputy Governor.

24. Deputy Governor to act as Governor.

24A. Authority of Deputy Governor to obtain information.

PART IV

DEPARTMENTS OF THE CENTRAL BANK

(A) The Department of Economic Research

25. Establishment and functions of department of economic research.

26. Authority to obtain information.

27. Training of technical personnel.

(B) The Department of Bank Supervision

28. Establishment and functions of department of bank supervision.

29. Examination of banking institutions.

29A. Continuous supervision of banking institutions.

29B. Director of Bank Supervision to examine books of any subsidiary or agency of a banking institution or of a Cooperative Society carrying on banking business.

30. Power of Monetary Board to suspend or restrict business of a banking institution.

31. Winding up of a banking institution.

32. Offences in regard to information and examinations.

32A. Scheme to insure deposits held by banking institutions and co-operative societies.

32B. Insurance of deposits held by banking institutions of societies.

32C. Premiums payable on deposits.

32D. Examination of insured banks and insured societies.

32E. Regulations.

(C) Other Departments

33. Other departments.

PART V

REPORTS AND PUBLICATIONS

34. Monthly statement.

35. Annual report.

36. Signatures on balance sheets and financial statements.

PART VI

PROFITS, LOSSES, AND SPECIAL ACCOUNTS

37. Financial year.

38. Computation of profits and losses.

39. Distribution of profits.

40. Extraordinary expenses of currency issue and monetary stabilisation.

41. Revaluation of profits and losses.

PART VII

AUDIT

42. Audit.

43. Powers and functions.

44. Repealed.

PART VIII

RESTRICTIONS RELATING TO CENTRAL BANK OFFICERS AND SERVANTS

45. Duty to maintain secrecy.

46. Liability for False statements in Central Bank accounts.

47. Protection for acts done in good faith.

CHAPTER III

THE CENTRAL BANK AND THE MEANS OF PAYMENT

PART I

ISSUE OF MEANS OF PAYMENT

(A) Currency

48. Definition of currency.

49. Issue of Currency.

50. Prohibition against issue of person other notes by any person other than Central Bank.

51. Liability for notes and coins.

52. Currency to be legal tender.

53. Characteristics of currency.

54. Contracts for printing of notes and minting of coins.

55. Exchange of currency.

56. Replacement of currency unfit for circulation.

57. Retirement of old notes and coins.

58. Mutilation or defacement of currency notes.

58A. Use of currency coin otherwise than as legal tender.

59. Conclusive evidence of imitation of a currency note.

59A. Conclusive evidence of imitation of a coin or current coin.

(B) Demand Deposits

60. Definition of "demand deposits”.

61. Acceptance and creation of demand deposits.

PART II

THE MONEY SUPPLY

62. Expression of the definition of "money supply”.

PART III

PAYMENT AND SETTLEMENT SYSTEM

62A. Establishment of systems for transfer of funds and transfer and settlement of scripless securities.

CHAPTER IV

THE CENTRAL BANK AND NATIONAL MONETARY POLICY

PART I

DOMESTIC MONETARY STABILISATION

63. Principles governing determination of domestic monetary policy.

64. Action to preserve monetary stability.

PART II

INTERNATIONAL MONETARY STABILISATION

65. Principles governing determination of international monetary policy.

66. International Reserve.

67. Composition of International Reserve.

68. Action to preserve the international stability of the rupee.

69. Repealed.

CHAPTER V

INSTRUMENTS OF CENTRAL BANK ACTION

PART I

OPERATIONS IN GOLD AND FOREIGN EXCHANGE

70. Dealings in gold.

71. Foreign exchange operations of central Bank.

72. Purchases and sales of foreign exchange from or to commercial banks in Sri Lanka.

73. Parities of foreign currencies with respect to the rupee.

74. Exchange rates for Central bank transactions.

75. Loans to and from foreign institutions.

PART II

REGULATION OF FOREIGN EXCHANGE OPERATIONS OF COMMERCIAL BANKS

76. Rates applicable to purchases and sales of exchange by commercial banks.

76A. Governor's powers in relation to exchange rates.

77. Control of foreign exchange holdings of commercial banks.

78. Requirements regarding currency positions of commercial banks.

79. Revaluation profits and losses on holdings of foreign exchange by banking institutions.

80. Information on exchange operations.

81. Capital movements.

PART III

CREDIT OPERATIONS WITH BANKING INSTITUTIONS

82. Principles governing credit operations.

83. Types of operations authorised.

84. Extension of maturities.

85. Loans to mortgage institutions.

86. Emergency loans and advances.

87. Interest and discount rates.

88. General conditions as to grant of credit facilities.

PART IIIA

MEDIUM AND LONG TERM CREDIT OPERATIONS WITH CREDIT INSTITUTIONS

88A. Loans or advances to credit institutions.

88B. Instrument of assignment by way of pledge to the Central Bank to be free of stamp duty.

88C. Instrument of assignment by way of pledge to the Central Bank need not be registered under the Registration of Documents Ordinance.

88D. Notarial execution not required in the case of assignments by way of pledge.

88E. Medium and Long Term.

88F. Interpretation.

88G. This Part of this Act to prevail over other written law.

PART IV

CREDIT OPERATIONS WITH THE GOVERNMENT

89. Provisional advances to the Government.

PART V

OPEN-MARKET OPERATIONS

90. Principles governing open-market operations.

91. Authority of Central Bank to transact open-market operations.

92. Conditions as to issue of securities by Central Bank.

PART VI

REGULATION OF THE RESERVES OF COMMERCIAL
BANKS AND PRESCRIBED FINANCIAL INSTITUTIONS

93. Reserve requirements.

94. Monetary Board to prescribe reserve ratios.

95. Interest on reserves when payable.

96. Computation of required reserves.

97. Consequences of reserve deficiencies.

98. Clearance and settlement.

98A. Powers of the Director of Bank supervision.

PART VII

ADDITIONAL REGULATION OF CREDIT OPERATIONS OF BANKING INSTITUTIONS

98B. Interpretation for Part VII.

99. Principles governing additional regulation.

100. Maturities of bank loans and security therefor.

101. Limitation of loans and investments of commercial banks.

102. Minimum capital ratios.

103. Margin requirements against letters of credit.

104. Fixing of interest rates, commissions and charges.

105. Conditions of eligibility of credit instruments for discount by Central Bank.

CHAPTER VA

THE CENTRAL BANK TO PURCHASE SHARES IN CERTAIN COMPANIES

105A The Central Bank to purchase shares in certain companies.

CHAPTER VI

THE CENTRAL BANK As FISCAL AGENT, BANKER, AND FINANCIAL ADVISER OF THE GOVERNMENT

106. Central Bank to be fiscal agent and banker of the Government.

107. Official depository of the Government.

108. Loan guarantees and loan insurance.

108A. Guarantee of loans to small-scale enterprises.

109. Other institutions as agents of Central Bank.

110. Remuneration for services.

111. Representation with foreign Governments, agencies, and international institutions.

112. Issue of Government securities.

112A. Facilities for maintenance of accounts at the Central Bank and a depository for scripless securities.

112B. Anybody corporate to provide facilities under sections 98(1) and 112A.

113. Management of the public debt.

114. Advice on Government credit operations.

115. Recommendations as to policy of Government agencies or institutions.

116. Monetary policy and Fiscal's policy.

116A. Transfer and use of dormant funds in commercial banks.

CHAPTER VII

GENERAL

117. Business which Central Bank may not transact.

118. Exemption from income tax, import duty, and stamp duty.

119. Acts of Monetary Board valid notwithstanding subsequent discovery of disqualification.

120. Officers and servants to be deemed public servants for purposes of Chapter IX of the Penal Code.

120A. Release of officer and servants of the Central Bank.

121. Protection for banking institutions.

121A. Prohibition of use of words "bank” ”banker” and "banking” in names of institutions other than banking institutions.

121B. No commercial bank to be established, no branch of a commercial bank to be opened, and no commercial bank to acquire business of another commercial bank, except with prior approval of Minister of Finance.

122. Offences and penalties.

123. Offences by Corporations.

124. Exclusion of application of companies Ordinance.

125. Provision for conflict with other written law.

126. Defence (Finance) Regulations.

127. Interpretation.

CHAPTER VIII

TRANSITIONAL PROVISIONS

128. Validity of currency in circulation.

129. Appointment of pensionable public officers to posts in Central Bank.

130. Contributions by Central Bank in respect of pensionable public officers appointed to posts in the bank.

SCHEDULE

37 of 1974,

16 of 1977,

10 of 1978.

58 of 1949,

33 of 1954,

11 of 1963,

18 of 1965,

16 of 1967,

5 of 1968,

21 of 1968,

2 of 1969,

30 of 1971,

14 of 1979,

62 of 1980,

52 of 1985,

7 of 1988,

26 of 1995,

32 of 2002,

9 of 2006,

1386-18-2005,

15 of 2014.

AN ACT to establish the Monetary System of Sri Lanka and the central bank to administer and regulate the system and to confer and impose upon the Monetary Board of the Central Bank powers, functions, and responsibilities necessary for the purposes of such administration and regulation and to provide for connected matters.

[Date of Commencement: 28th August, 1950]

1. Short title.

This Act may be cited as the Monetary Law Act.

CHAPTER I

ESTABLISHMENT OF THE MONETARY UNIT

2. The unit of monetary value.

(1) The standard unit of monetary value in Sri Lanka shall be the Sri Lanka rupee, which shall be represented by the signs "Re.” and "Rs.”.

(2) The Sri Lanka rupee shall be divided into one hundred units each of which shall be called a "cent”.

3. The par value of the rupee.

(1) The Monetary Board shall, by unanimous decision, recommend to the Minister that the par value of the Sri Lanka rupee be determined in terms of special drawing rights or in terms of such other common denominator as may be prescribed by the International Monetary Fund, and upon such recommendation, the Minister shall, by Order published in the Gazette, determine and declare the par value of the Sri Lanka rupee in accordance with the terms specified in such recommendation:

Provided, however, that if the Monetary Board is of the view that international economic conditions do not warrant the introduction or maintenance of exchange arrangements based on stable but adjustable par values, it may, by unanimous decision, recommend to the Minister that no determination be made under the preceding provisions of this section or that any Order made under this section be revoked, and upon any such recommendation, the Minister shall desist from making an Order under this section, or, as the case may be, revoke any Order made under this section.

(2) The Monetary Board may by unanimous decision recommend to the Minister the alteration of the par value of the Sri Lanka rupee, if the Board is of the opinion that such alteration is rendered necessary in any of the following circumstances, that is to say.

(a) if the continuance of the existing par value hinders or is likely to hinder unduly, the achievement and maintenance of a high level of production, employment and real income and the full development of the productive resources of Sri Lanka, or results, or is likely to result, in a serious decline in the International Reserve of the Central Bank or in other utilisable external assets of Sri Lanka or if such decline cannot be prevented except by—

(i) a large scale increase in the external liabilities of Sri Lanka; or

(ii) the persistent use of restrictions on the convertibility of the rupee into foreign currencies in settlement of current transactions; or

(iii) undue or sustained Government assistance to one or more of the major export industries; or

(iv) prolonged use of measures designed to restrict the volume of imports of essential commodities; or

(b) if the maintenance of the existing par value is producing, or is likely to produce, a persisting surplus in the balance of payments on current account and a monetary disequilibrium which cannot be adequately corrected by other Government action or by Central Bank action authorised by this Act; or

(c) if uniform proportionate changes in the par values of currencies of its members are made by the International Monetary Fund, and upon such recommendation, the Minister may, by Order published in the Gazette, amend, in accordance with the terms specified in such recommendation, any Order made under subsection (1).

(3) Any Order made under subsection (1) or subsection (2) shall cease to have effect after a period of ten days from the date of publication thereof, unless such Order is approved by Parliament within that period:

Provided, however, that if Parliament is not in session on the date of publication of the Order, the Order shall cease to have effect after a period of ten days from the date of the next meeting of Parliament, unless such Order is approved by Parliament within that period.

[S 3 subs by s 8 of Law 10 of 1978.]

4. The use of the rupee.

(1) Every obligation of the following description, that is to say, every contract, sale, payment, bill, note, instrument, and security for money, and every transaction, dealing, matter, and thing whatsoever relating to money, or involving the payment of money or the liability to pay any money, shall, in the absence of an express agreement to the contrary which is not rendered invalid or unlawful by any other written law, be held to be made, executed, entered into, done, and had in Sri Lanka according to the Sri Lanka rupee.

(2) In any case where any such obligation which is by agreement expressed in any monetary unit other than the Sri Lanka rupee has, by reason that such agreement is rendered invalid or unlawful by any other written law, to be executed or liquidated in Sri Lanka rupees, the necessary conversions shall be effected on the basis of the legal parities ruling at the time when such obligation falls to be executed or liquidated, or at such other time as may be specified in that behalf in the agreement.

CHAPTER II

ESTABLISHMENT OF THE CENTRAL BANK TO ADMINISTER AND REGULATE THE MONETARY SYSTEM

PART I

THE CENTRAL BANK, ITS POWERS AND PURPOSES

5. Establishment and objectives of the Central Bank.

An institution, which shall be called and known as the Central Bank of Sri Lanka (herein after referred to as "the Central Bank”) is hereby established as the authority responsible for the administration, supervision and regulation of the monetary; financial and payments system of Sri Lanka, and without prejudice to the other provisions of this Act, the Central Bank is hereby charged with the duty of securing, so far as possible by action authorised by this Act, the following objectives, namely—

(a) economic and price stability; and

(b) financial system stability with a view to encouraging and promoting the development of the productive resources of Sri Lanka.

[S 5 subs by s 2 of Act 32 of 2002.]

5A. Powers of the Central Bank and the Monetary Board in relation to section 69 A of the Inland Revenue Act, No. 4 of 1963.

(1) For the purposes of section 69A of the Inland Revenue Act, No. 4 of 1963, the Central Bank may open, maintain and manage special deposit accounts.

(2) Where an institution is approved by the Minister in charge of the subject of Finance by Order made under paragraph of subsection (2) of section 69A of the Inland Revenue Act, No. 4 of 1963, the Monetary Board may determine the terms and conditions subject to which that institution may open, maintain and manage special deposit accounts for the purposes of that section.

[S 5(a) ins by s 56 of Act 18 of 1965.]

6. Capital of Central Bank.

The capital of the Central Bank shall be fifteen million rupees, which sum is hereby appropriated to the bank from the surplus assets of the Board of Commissioners of Currency:

Provided however, the Monetary Board may from time to time, having regard to the viability and stability of the financial system of Sri Lanka and in the interest of the national economy, with the concurrence of the Minister to whom the subject of Finance has been assigned, increase the capital of the Central Bank to an amount not exceeding fifty billion rupees.

[S 6 am by s 2 of Act 15 of 2014.]

7. Place of business.

The Central Bank shall have its principal place of business in Colombo, and may have such branches, agencies, and correspondents in other places in Sri Lanka or abroad, as may be necessary the proper conduct of the business of the bank.

PART II

THE MONETARY BOARD

8. Constitution of Monetary Board.

(1) The Monetary Board of the Central Bank shall, in addition to determining the policies or measures authorised to be adopted or taken under this Act, be vested with the powers, duties and functions of the Central Bank under this Act., and be generally responsible for the management operations and administration of the Bank:

Provided however, where the Monetary Board considers it appropriate, it may delegate to the Governor, or to any officer of the Central Bank or to a committee of such officers, any power, duty or function conferred or imposed on, or assigned to the Board by section 10(a), (b), (bb),(d) and section 27.

[S 8(1) subs by s 3 of Act 32 of 2002.]

(1A) Where any power, duty or function is delegated by the Monetary Board under subsection (1) the person or the group of persons to whom such power, duty or function is delegated shall exercise perform or discharge such power duty or function, in accordance with such general or special directions or guidelines as may be issued by the Monetary Board;

[S 8(1A) ins by s 3 of Act 32 of 2002.]

(2) The Monetary Board shall consist of—

(a) the Governor of the Central Bank who shall be the chairman of the board;

(b) the person holding office for the time being as Secretary to the Ministry of the Minister in charge of the subject of Finance; and

[S 8(2)(b) subs by s 3 of Act 52 of 1985.]

(c) three members appointed by the president on the recommendation of the Minister of Finance, with the concurrence of the Constitutional Council.

[S 8(2)(c) subs by s 3 of Act 32 of 2002.]

(3) In the absence of the Governor from any meeting of the Monetary Board, the Deputy Governor designated as senior by the board shall act as his alternate and shall preside at the meeting and have the right to vote thereat.

[S 8(3) subs by s 2 of Act 37 of 1974.]

(4) In the absence of the member of the Monetary Board mentioned in paragraph (b) of subsection (2) from any meeting of the board, the person holding office for the time being as Deputy Secretary to the Treasury shall act as that member's alternate at the meeting and have the right to vote thereat.

[S 8(4) subs by s 2 of Act 37 of 1974.]

(5) In the absence of the member of the Monetary Board mentioned in paragraph (c) of subsection (2) from any meeting of the board the officer appointed to act for the Secretary to the Ministry in charge of the subject of Planning and Economic Affairs shall act as that member's alternate at that meeting and have the right to vote thereat.

[S 8(5) subs by s 2 of Act 37 of 1974.]

9. Monetary Board to be a body corporate.

(1) The Monetary Board of the Central Bank shall in that name be a body corporate with perpetual succession and a common seal and may sue or be sued in its corporate name.

(2) The Monetary Board shall have the power, in the name of the Central Bank, to hold property, both movable and immovable, and to sell and dispose of the same, to enter into contracts and otherwise to do and perform all such acts or things as may be necessary for the purpose of carrying out the principles and provisions of this Act.

(3) The Monetary Board may, in the name of the Central Bank, acquire and hold such assets and incur such liabilities as result directly from operations authorised by this Act or as are essential for the proper conduct of such operations.

10. General powers of Monetary Board.

For the purposes of the exercise of its powers, duties, functions, and its powers, duties, functions, and responsibilities under this Act, the Monetary Board—

(a) may, subject to the provisions of section 22 and section 23, appoint such officers and servants as the board may consider necessary and remove them from office or dismiss them, and may fix the salaries or wages, or other remuneration, of such officers and servants, and may prescribe their conditions of service;

(b) may establish and regulate pensions or provident funds or schemes for the benefit of officers and servants and their dependents and nominees, and may make contributions to any such fund or scheme;

(bb) may, notwithstanding the provisions of paragraph (c) of section 117, grant loans and advances, for housing purposes, to officers and servants of the Central Bank on the mortgage of, or otherwise on the security of, immovable property;

[S 10(bb) ins by s 2 of Act 7 of 1988.]

(c) may make such rules and regulations as the board may consider necessary in relation to any matter affecting or connected with or incidental to the exercise, discharge, or performance of the powers, functions, and duties of the Central Bank; and

(d) may utilise the funds of the Central Bank for the purpose of meeting all expenditure incurred by the board in the management, administration, and operation of the bank and in the exercise, performance, and discharge of powers, functions, and responsibilities of the bank under this Act.

11. Disqualification for appointment as Governor or as member of the Monetary Board.

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

[S 11(1)(a) am by s 4 of Act 32 of 2002.]

(b) he is a public officer or a 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

[S 11(2)(a) am by s 4 of Act 32 of 2002.]

(b) he is a public officer or a 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 he is in receipt of a salary or other remuneration paid 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.

[S 11(2)(c) subs by s 4 of Act 32 of 2002.]

12. Appointment, remuneration of Governor of Central Bank.

(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.

[S 12(1) subs by s 5 of Act 52 of 1985.]

(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.

[S 12(2) am by s 5 of Act 52 of 1985.]

(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.

[S 12(3) subs by s 5 of Act 52 of 1985.]

13. Term of office of Governor and appointed member.

(1) The term of office of the Governor, and of the person appointed under paragraph (c) of section 8(2) (hereinafter referred to as the "appointed member”), shall, subject to the provisions of subsection (2) of this section, be the period of six years commencing on the date of his appointment:

Provided, however, that the term of office of the Governor, and of any person appointed under paragraph (c) of subsection (2) of section 8 (hereinafter referred to as "an appointed member”) shall be the period of three years from the date of his appointment.

[S 13(1) am by s 5 of Act 32 of 2002.]

(2) In the event of the vacation of office by the Governor or by an appointed member, before the expiration of his term of office, another person shall be appointed in his place to hold office during the unexpired part of the term of office of the Governor or member so vacating office.

[S 13(2) am by s 2 of Act 32 of 2002.]

(3) Any person vacating office as Governor or as appointed member by effluxion of time shall be eligible for reappointment.

[S 13(3) subs by s 4 of Act 37 of 1974.]

14. Remuneration of appointed member.

(1) An appointed member shall receive an allowance for each day on which he attends a meeting of the Monetary Board.

[S 14(1) am by s 6 of Act 32 of 2002.]

(2) The amount of such allowance shall be fixed by the Minister in charge of the subject of Finance in consultation with the Prime Minister.

[S 14(2) subs by s 5 of Act 37 of 1974.]

15. Alternate for appointed member.

(1) Where an appointed member is, through illness, absence from Sri Lanka, or for any other reason, temporarily unable to perform the functions of his office, the President may, on the recommendation of the Minister in charge of the subject of Finance, appoint some other person to act in his place for such period as may be specified by the President

[S 15(1) am by s 7 of Act 32 of 2002.]

(2) The provisions of section 11 shall apply in relation to any such appointment.

(3) The person appointed to act as a member of the board under this section shall during the period of his appointment be deemed for the purposes of this Act to be an appointed member.

[S 15(3) am s 7 Act 32 of 2002.]

16. Removal from office of Governor or appointed member.

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.

[S 16 am by s 8 of Act 32 of 2002.]

17. Meetings of Monetary Board.

(1) Meetings of the Monetary Board shall be held at least once in every two weeks and, in addition, as frequently as is necessary for the purpose of the discharge of its responsibilities under this Act.

[S 17(1) subs by s 6 of Act 37 of 1974.]

(2) Meetings of the board shall be convened by the Governor.

[S 17(2) subs by s 6 of Act 37 of 1974.]

1(3) At any meeting of the board three members shall constitute a quorum.

[S 17(3) subs by s 9 of Act 32 of 2002.]

1(4) No decision taken at any meeting of the board shall be deemed to be a decision of the board unless it has the concurrence of at least three members, or, in any case where any other provision of this Act requires a unanimous decision, the concurrence of all five members.

[S 17(4) subs by s 9 of Act 32 of 2002.]

18. Attendance of certain officers at meetings of Monetary Board.

The Deputy Governor designated as senior by the Monetary Board and the Director of Economic Research may attend meetings of the Monetary Board, but shall not have the right to vote on any question.

PART III

THE GOVERNOR AND DEPUTY GOVERNORS

19. General functions and duties of Governor.

(1) The Governor shall be the chief executive officer of the Central Bank and shall accordingly be charged with the following powers, duties, and functions:

(a) the execution of policies and measures approved by the Monetary Board and, subject to any such policies and measures as may be applicable, the direction, supervision, and control of the operations of the Central Bank and its internal management and administration;

(b) the preparation of the agenda for meetings of the Monetary Board and the submission for the consideration of the board of policies and measures considered by him to be necessary for the purpose of carrying out the principles and provisions of this Act; and

(c) the exercise or performance of such other powers or duties as may be conferred or imposed upon him by the Monetary Board.

(2) Every instrument of the following description, that is to say, every contract, promissory note, security, report, balance sheet, statement, or other document and every rule, regulation, order, direction, notice, or requirement which bears the signature of the Governor or such other officer as may be authorised in that behalf by the Monetary Board, shall be deemed for all purposes to be an instrument executed, made, or issued by the Central Bank or by the Monetary Board, as the case may be.

20. Governor to be principal representative of Central Bank and Monetary Board.

The Governor of the Central Bank shall be the principal representative of the bank and of the Monetary Board and shall in that capacity, but in accordance with policies or rules approved or made by the board, have authority”

(a) to represent the Central Bank and the board in all relations with other persons, including the Government and anybody of persons, corporate or unincorporate, whether public or private, domestic, foreign, or international; and

(b) to represent the Central Bank and the board in any legal proceedings either personally or through an Attorney-at-law.

21. Delegation of powers of Governor.

Subject to and in accordance with such rules, if any, as may be made by the Monetary Board in that behalf, the Governor may delegate to any other officer of the bank his authority to represent the bank for any purpose mentioned in section 20, so however that the Governor shall remain and continue to be responsible to the board for and in respect of any act or thing done or omitted to be done by any such delegate.

22. Appointment of Deputy Governors.

The Monetary Board shall, with the concurrence of the Minister in charge of the subject of Finance appoint one or more Deputy Governors who shall perform such duties and exercise such powers as may be assigned to them by the board.

23. Disqualification and removal of Deputy Governor.

(1) A person shall be disqualified for appointment as a Deputy Governor if—

(a) he is a Member of Parliament or a Governors member of any local authority;

(b) he is a public officer or a judicial officer within the meaning of the Constitution, 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).

Nothing in paragraph (b) or (c) shall be held to disqualify an officer or servant of the Central Bank who has been temporarily released to serve in any office or position for which salary or remuneration is payable out of public funds or who is a director of any banking institution which is a public corporation, for appointment as a Deputy Governor.

[S 23(1) ins by s 3 of Act 7 of 1988.]

(2) The Monetary Board may, with the concurrence of the Minister in charge of the subject of Finance, remove any Deputy Governor from office—

(a) if he becomes subject to any disqualification mentioned in subsection (1); 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 board, is of a fraudulent or illegal character or is manifestly opposed to the objects and interests of the Central Bank; or

(d) if, in the opinion of the board, he has failed to carry out his duties:

Provided that nothing in this subsection shall be held to empower the Monetary Board, with the concurrence of the Minister, to remove from office, any Deputy Governor who has been temporarily released, under subsection (3) to serve in any office or position for which salary or other remuneration is payable out of public funds or to serve with a banking institution which is a public corporation, as a Director of that banking institution by reason only of the fact that such Deputy Governor, holds such office or position or is such Director.

[S 23(2)(d) subs by s 3 of Act 7 of 1988.]

(3) The Monetary Board may, with the concurrence of the Minister, temporarily release a Deputy Governor to—

(a) serve in an office or position for which a salary or other remuneration is payable out of public funds;

(b) serve with a banking institution, which is a public corporation, as a Director of that banking institution, on such terms as may be determined by the Monetary Board, with like concurrence. For the purposes of this section, "public corporation” shall have the same meaning as in Article 170 of the Constitution.

[S 23(3) subs by s 3 of Act 7 of 1988.]

24. Deputy Governor to act as Governor.

In the event of the temporary absence from duty of the Governor or of the temporary inability of the Governor to perform his functions and duties, the Deputy Governor designated as senior by the board shall act as the chief executive officer of the Central Bank and shall have authority to exercise the powers and perform the functions and duties of the Governor under this Act.

24A. Authority of Deputy Governor to obtain information.

(1) A Deputy Governor may require any person—

(a) to furnish to him or to any officer or servant of the Central Bank designated by him within such time and in such manner as he may specify, such information as he may consider necessary to obtain for the purpose of the proper discharge of the functions and responsibilities of the Central Bank; or

(b) to produce for inspection to him or to any officer or servant of the Central Bank, designated by him within such time and in such manner as he may specify, any books or records in the possession of such person containing or likely to contain any such information, as is referred to in paragraph (a) of this subsection.

(2) Any person who, without reasonable cause, fails or refuses to comply with any requirement under subsection (1) shall be guilty of an offence.

(3) In this section” person” includes any officer of any department of Government and anybody of persons, corporate or unincorporate, whether established or constituted under any written law or otherwise.

[S 24(a) ins. by s 6 of Act 52 of 1985.]

PART IV

DEPARTMENTS OF THE CENTRAL BANK

(A) The Department of Economic Research

25. Establishment and functions of department of economic research.

(1) The Central Bank shall establish and maintain a department of economic research which shall prepare data and conduct economic research, for the guidance of the Monetary Board and the Governor in formulating, implementing, and executing policies and measures and for the information of the public, in the subjects of money and banking and other economic subjects of general interest.

(2) The head of the department established under subsection (1) shall be called the Director of Economic Research.

26. Authority to obtain information.

(1) The Director of Economic Research or any officer of the department of economic research authorised for the purpose by the Director may in such manner as may be prescribed by rules made under section 10—

(a) require any person to furnish to him such information as he may consider it necessary to obtain for the purposes of the proper discharge of the functions and responsibilities of the Central Bank; or

(b) require any person to produce for inspection any books or records in his possession containing or likely to contain any such information.

(2) Any person who without reasonable cause fails or refuses to comply with any requirement made under subsection (1) shall be guilty of an offence.

(3) In this section "person” includes any officer of any department of Government, and any body of persons, corporate or unincorporate, whether established or constituted under any written law or otherwise.

27. Training of technical personnel.

The Central Bank shall promote and sponsor the training of technical personnel in the subjects of money, banking, statistics, finance, and other economic subjects, and for this purpose, the Central Bank is hereby authorised to defray the costs of study, in Sri Lanka or abroad, of employees of the bank who are of proved merit, or of any other qualified persons selected by the Monetary Board.

(b) The Department of Bank Supervision

28. Establishment and functions of department of bank supervision.

(1) For the purposes of the continuous supervision and periodical examination of all banking institutions in Sri Lanka, the Central Bank shall establish and maintain a department of bank supervision.

(2) The head of the department established under subsection (1) shall be called the Director of Bank Supervision.

29. Examination of banking institutions.

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