Financial sector regulators sign MoU for consolidated risk-based supervision

Saturday, 5 January 2019 00:00 - - {{hitsCtrl.values.hits}}

Central Bank Deputy Governor H. A. Karunaratne, IRCSL Director General Damayanthi Fernando, and SEC Director General Vajira Wijegunawardene signing the MoU while Central Bank Governor Indrajit Coomaraswamy looks on

The Central Bank has entered into a memorandum of understanding (MoU) with the Securities and Exchange Commission of Sri Lanka (SEC) and the Insurance Regulatory Commission of Sri Lanka (IRCSL) to conduct effective consolidated risk-based supervision.

The agreement was signed on 31 December, and the Central Bank will be the lead supervisor in this regard, the Central Bank said in a statement yesterday.

Consolidated supervision is an essential tool for supervising financial groups. 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.

In the presence of Central Bank Governor Dr. Indrajit Coomaraswamy, representatives of the three regulators, Central Bank Deputy Governor H. A. Karunaratne, SEC Director General Vajira Wijegunawardane, and IRCSL Director General Damayanthi Fernando, signed the MoU on consolidated risk-based supervision on behalf of the respective institutions.