Two Indian private banks Axis Bank and ICICI Bank will be closing down their operations in Sri Lanka with the pemission of the Central Bank, reliable banking sources disclosed.
The Central Bank has announced that it intends to take necessary action against the banks that have not complied with the order to reduce the Average Weighted Prime Lending Rate (AWPR) for end 2019 in line with the Monetary Law Act.
The monetary regulator has not permitted the two relevant Indian banks to perform banking operations and the banks cannot accept deposits from the public as well. According to the Central Bank, the licenses issued to them will be canceled once the winding-up process is over.
Issuing a statement, the Central Bank said while several licensed banks complied with the order and reduced the lending rates by 250 basis points, some others including the Axis Bank and ICICI Bank have not reduced their rates.
The Central Bank of Sri Lanka in its statement said, “The Monetary Law Act Order No. 02 of 2019 on “Enhancing Efficiency of the Transmission of Recent Policy Decisions to Rupee Denominated Market Lending Rates” required, inter alia, every licensed commercial bank (LCB) to reduce their weekly Average Weighted Prime Lending Rate (AWPR) by at least 250 basis points by 27 December 2019,
compared to their AWPR published by the Central Bank of Sri Lanka as at 26 April 2019 in the Weekly Economic Indicators publication. This shall not apply to LCBs, whose AWPR reaches or falls below 9.50 percent per annum as at the date of this Order or anytime thereafter.”
“Nevertheless, it is also observed that People’s Bank, Commercial Bank of Ceylon PLC, Indian Overseas Bank, MCB Bank Ltd, Public Bank Berhad, Standard Chartered Bank, Amana Bank PLC, and Axis Bank Ltd failed to comply with the Monetary Law Act Order No. 02 of 2019
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