CB considers new authority for banking/finance supervision
View(s):The Central Bank (CB), in a bid to strengthen monitoring of banks and finance companies, is considering removing its supervisory functions for and setting up a separate authority which will report to the Monetary Board. ”This will be quite like the Financial Conduct Authority in UK,” CB Governor Arjuna Mahendran told the Business times. He said the CB, with assistance by CB’s former Deputy Governor, Joan de Silva (currently on her second stint at CB as a consultant) is redrafting the rules pertaining to this move. The Financial Conduct Authority role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.
Currently CB’s Bank Supervision Department handles regulation and supervision of licensed bank and the Non-Bank Financial Institutions.
Mr. Mahendran was of the view that supervision is a ‘full time’ job and needs more beefing up as opposed to the on-site and off-site supervision that’s done by these two departments. “(Separating) this department and setting up a new authority with a larger and senior set of managers makes sense,” he said. He also mentioned that there are a host of dubious entities in furthest corners of the country which are operating that CB isn’t aware of. More strengthening of a Supervision Division will arrest these issues, he said. “What we want to do is to aim to ensure that firms have a resilient infrastructure, with strong risk management, individual accountability and a responsible culture.”