Page 45 - CPM Sri Lanka-Chartered Manager-Sept. 2021

THE INSTITUTE OF CHARTERED PROFESSIONAL MANAGERS OF SRI LANKA
JANUARY 2021

Some markets, such as Singapore, have one
regulator since the whole country operates as
an IFC. Countries such as Dubai has a separate
regulator for Dubai International Financial Centre
(DIFC) since there is a larger domestic baking
unit outside DIFC. By looking at these models,
it makes sense for Sri Lanka to have a separate
governance body looking after offshore banking
in Port City which will in turn report to the Central
Bank of Sri Lanka. Until such time, the existing
regulator can undertake both the regulation and
supervision of financial institutions setting up
offices in the Port City.
As offshore banks would be operating in “any
designated foreign currency”, what are the
implications on the stability of the domestic
banking system?

Port City will be completely separated from the
domestic banking system in the country and we
do not foresee any challenge for the domestic
banking industry due to the emergence of the
Port City. There should be a clear separation
between the two. Offshore units should be
servicing only the entities that are set up in the
Port City and run as two different jurisdictions.
Any transaction that a domestic company plans
to do in offshore banking should be subject to
regulatory clearance. Some Sri Lankan entities
access offshore banking for cheaper funding
and for some cross-border transactions subject
to regulatory approval. We should continue that
process even with the Port City.

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