The Central Bank of Sri Lanka (CBSL) 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) recently, to conduct effective consolidated risk-based supervision, with the CBSL as the lead supervisor.
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 to evaluate and assess contagion and reputation risks posed by such entities to the financial system and to contain systemic risk. Representatives of the three regulators, Deputy Governor of CBSL H. A. Karunaratne, Director General of SEC, Vajira Wijegunawardane and Director General of IRCSL, Damayanthi Fernando signed the MoU on behalf of the institutions.