31. The following new part is hereby inserted immediately after Part IX and shall have effect on Part IXA of the principal enactment:
| 76A.
| | (1) from and after such date as may be determined by the Minister by Order published in the Gazette, the business of accepting deposits of money and investing and lending such money shall not be carried on except by a company which has an equity capital in an amount not less than fifty million rupees and under the authority of " licence issued by the Monetary Board for such purpose under this Part of this Act: | | |
| | (2) Where such company is a company incorporated outside Sri Lanka, no licence shall be issued under this Part of this Act unless such company has complied with the provisions of Part XIII of the Companies Act, No. 17 of 1982. | | |
| | (3) Notwithstanding the provisions of subsections (1) and (2) of this section and of section 76B, all institutions specified in Schedule III of this Act, shall be issued a licence in accordance with the provisions of this Part of this Act on or after the date determined by the Minister under subsection (1). | | |
| | (4) Any company carrying on business contravention of subsection (1), shall be guilty of an offence under this Act. | | |
| | (5) For the purposes of this section 449 of the Companies Act. No, 17 of 1982 and includes a company duly incorporated outside Sri Lanka, or a body corporate formed in pursuance of any statute of any foreign country Royal Charter or letters patent and a body corporate establishment by or under any law and shall not include a private company incorporated outside Sri Lanka ; and | | |
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| 76B.
| | (1) Every application for a licence under section 76A shall be made to the Monetary Board in the prescribed form, and shall contain a declaration by the applicant that the particulars stated in the application art to the knowledge and belief of the applicant true and accurate. | | |
| | (2) Every application for a licence shall be accompanied by-
| | | (a) a copy of the Memorandum and the Articles of Association of the Company or the constitution of the company or any other document associated with the same ; |
| (b) In the case of an application by a company or body corporate incorporated outside Sri Lanka, a written undertaking supported by a resolution of its Board of Directors stating that such company body corporate, as the case may be, shall in demand by the Central Bank provide such funds as may be necessary to cover all obligations and liabilities incurred in the carrying on of its business in Sri Lanka, and a report containing such information as may be determined by the Monetary Board from the monetary authority of the country in which such company is incorporated. |
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| | (3) On receipt of an application under subsection (1) the Monetary Board may where such Board considers it necessary, require the applicant to furnish such other documents or particulars as may be necessary, in order to determine whether a licence should be issued or not, to such company. | | |
| | (4) Any applicant who submits an application and other documents under this section containing information which to his knowledge is false or misleading in any material particular shall be guilty of an offence under this Act. | | |
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| 76C.
| | (1) On receipt of an application under section 76B, the Monetary Board having considered the documents and particulars accompanying such application, and being satisfied-
| | | (a) that it is appropriate to permit the applicant to use the term "bank" or any of its derivatives or its transliterations ; |
| (b) that the terms and conditions of the licence will be observed by the applicant ; and |
| (c) that it is not determined to the interests of the national economy to issue such licence to the applicant. |
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| | (2) The licence shall specify the place, places or area within which such company may carry or its business, and such company shall not carry on business in any other place except with the written approval of the Monetary Board. | | |
| | (3) Any company which has been issued with a licence under this Part of this Act, shall hereinafter be referred to as a "licenced specialized bank. ", | | |
| | (4) A licensed specialised bank may carry on such forms of business as are specified in Schedule IV to this Act, subject to such restriction as may be expressly stipulated to the licence on the form of business that it may be permitted to carry on. | | |
| | (5) A licensed specialised batik carrying on business under the authority of a licensed issued under this Part of this Act shall be deemed not to act in contravention of section 2 of the Finance Companies Act. No. 78 of 1988. | | |
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| 76D.
| | (1) A company which has been issued with a licence under this Part of this Act shall use as part of its name or its description any of the words "bank ", "banker" or "banking" in any language; | | |
| | (2) Nothing in this section shall apply to a company which, within one week of Its incorporation, applies for licence under section 76B and until such time as the declaration of the Monetary Board in respect of the application is conveyed to the company. | | |
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| 76E. The Monetary Board shall keep and maintain in the prescribed form a register of every institution licensed as a licensed specialised bank under this Part of this Act. |
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| 76F.
| | (1) Without prejudice to its under section 76M where the Monetary Board in satisfied that any licensed specialised bank has-
| | | (a) failed to commence business within nine months of the issue of the licence; or |
| (b) failed to pay up any debts incurred by it, on such debts becoming due; or |
| (c) where a petition or action for relief has been filed against it, had appointed in respect of it, under any bankruptcy law or any other law which provides for relief of debtors or which relates to debtors, a custodian or receiver; or |
| (d) ceased to carry on business in respect of which the licence was issued ; or |
| (e) continuously violates or contravenes the previsions of this Part of this Act or any directions issued thereunder, or |
| (f) had its licence or authority to operate cancelled or withdrawn by the appropriate authority or regulatory body of the country in which such bank is incorporated, |
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| | (2) A licensed specialised bank may tender objections in writing to the Monetary Board against the notice of cancellation given under subsection (3), within thirty days of the dates of receipt of such notice, giving reasons why the licence issued to it should not be so cancelled. | | |
| | (3) After the expiration of sixty days from the date of the notice of the cancellation and after considering the objections tendered to the Monetary Board under subsection (2) the Board may withdraw such notice or cancel the licence issued and shall notify such bank accordingly. | | |
| | (4) A cancellation of a licence under subsection (3), shall take effect-
| | | (a) where no appeal is preferred under subsection (5), after the period for preferring such appeal has expired; or |
| (b) where an appeal against the cancellation is preferred under subsection (5), after the cancellation is upheld by the Court of Appeal, |
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| | (5) Any person aggrieved by a decision of the Monetary Board in respect of any cancellation under subsection (3), may appeal against such decision to the Court of Appeal within fourteen days of his being informed by the Board of such cancellation. | | |
| | (6) Until rules are made under Article 136 of the Constitution pertaining to appeals under this section, the rules made under that Article pertaining to applications by way of revision to the Court of Appeal shall apply to every appeal made under this section. | | |
| | (7) The Court of Appeal may on an appeal made to it under subsection (5), confirm, revise, modify or set aside the decision against which the appeal is made and make any other order as the interests of justice may require. | | |
| | (8) Where a licence is cancelled, the Monetary Board shall remove the name of such licensed specialised bank from the register maintained under section 76E and may issue such directions as it considers necessary, including directions for winding up of such licensed specialised bank. | | |
| | (9) Where the licensed specialised bank fails to comply with a direction issued tinder subsection (8) for the winding up of the company within thirty days of the issue of such directions, the Monetary Board may require the Director of Bank Supervision to the action for the winding up of the licensed specialised bank, and the provisions of section 76M shall apply to such winding up. | | |
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| 76G.
| | (1) A licensed specialised bank shall at all times maintain an equity capital of Bet less than fifty million rupees. | | |
| | (2) A licenced specialised bank shall not reduce or impair its equity capital or statutory reserves without the prior written approval of the Monetary Board. | | |
| | (3) For the purpose of this section -
| | | (a) " equity capital" shall have the sane meaning as in subsection (2) of section 19 of this Act; and |
| (b) "statutory reserves" means any reserve funds maintained by the licensed specialized bank in pursuance of a direction issued to it under this Part of this Act. |
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| 76H. The Provisions of Part V of this Act shall apply in respect of licensed specialised banks as if the expression "licensed commercial bank" wherever that expression occurs in that Part was substituted with the expression " licensed specialised bank ". |
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| 76J.
| | (1) Notwithstanding the provisions any other law the Monetary Board may give directions to licensed specialised banks or to any category of licensed specialised banks regarding the manner in which any aspect of the business of such banks to be conducted and in particular-
| | | (a) the maintenance of capital adequacy duties by the licensed specialised banks of such amounts as may be determined by the Monetary Board ; |
| (b) the maintenance of the reserve fund of a licensed specialised bank including to reduction or impairment; |
| (c) the terms and conditions under which deposits may be accepted, the maximum rates of interest payable on such deposits, and the maximum periods for which deposits may be accepted and the maximum amount which may be deposited with a licensed specialized bank in the name of one person in one or more accounts; |
| (d) the terms and conditions under which any loan, credit facility or any type of accommodation may be granted by such banks, the maximum rates of interest that may be charged on such loans, credit facilities or other types of accommodation, and the maximum periods for which any such loan, credit facility or other type of accommodation may be granted ; |
| (e) the maximum rates which may be paid to, or charged by, such banks by way of commissions, discounts, fees or other receipts or payments whatsoever ; |
| (f) the minimum initial payment a prospective hirer should make on any hire purchase agreement and specific different classed of transactions ; such minimum initial payment may be expressed as a percentage of the value of the goods hired under such agreement ; |
| (g) the terms and conditions under which investments may be made by such banks; |
| (h) the maximum permissible maturities for loans, credit facilities or other types of accommodation and investments made by such banks, and the nature and amount of the security that may be required permitted for various types of lending, credit and investment operations; |
| (i) the form and manner in which books of accounts or other records or documents are to be maintained by such banks; |
| (j) the exclusion from the income of licensed specialised banks in whole or in part, unpaid interest in respect of loans granted, if such loans have become overdue; |
| (k) the minimum ratio which the liquid assets of such banks should bear to the total deposit liabilities of such banks; |
| (l) the maintenance of cash balances by licensed specialised banks with the Central Bank if so required by the Monetary Board, and the minimum ratio such cash balances should bear to the deposit liabilities of licensed specialised banks ; |
| (m) conditions which should be applicable to withdrawal by depositors of deposits before maturity; |
| (n) prohibiting such banks from increasing the amount of their loans, credit facilities, other types of accommodation or investments ; |
| (o) fixing limits to the rate at which the amount of any loans, investments or accommodation made or granted by them may be increased within specified periods ; |
| (p) requiring the decrease of the amount of their loans, investments or accommodation to specified limits within a specified period; |
| (q) the maximum percentage of the share capital in a licensed specialised bank which may be held-
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| (r) the margins to be maintained in respect of secured advances; |
| (s) the terms and conditions relating to leasing agreements between the licensed specialised bank and a lessee ; |
| (t) restriction on the types of activities that may be carried on by licensed specialised banks. |
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| | (2) The maximum rates of interest Sixes by any direction under paragraphs (c) and (d) of subsection (1) shall, it so determined by the Monetary Board, apply In respect of any deposit accepted or is respect of any loan, credit facility or any other financial accommodation granted, before the date of inch direction : | | |
| | (3) For the purposes of this Part at the Act, the Monetary Board may give directions where necessary to any particular licensed specialised bank in particular on such matters as are specified in subsection (1). | | |
| | (4) The Monetary Board may in the discretion pay interest on any cash balance maintained by a licensed specialised bank In the Central Bank in pursuance of a direction issued to it under paragraph (I) of subsection (1) at such rate as may be determined by the Monetary Board. | | |
| | (5) A licensed specialised bank which fails to act in compliance with a direction issued under this section or acts in contravention of such direction shall be guilty of an offence under this Act. | | |
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| 76K.
| | (1) Where the Monetary Board on a report made by the Director of Bank Supervision Is of the opinion that a licensed specialised bank-
| | | (i) is following unsound or improper financial practices, detrimental to the interest of its depositors; or |
| (ii) Is likely to carry its business to a manner detrimental to the interests of its depositors; or |
| (iii) has contravened or failed to comply with any provisions of this Part and of Part V of this Act, or any direction issued thereunder. |
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| | (2) Any licensed specialised bank dissatisfied with an order given under subsection (1) may, before the expiry of thirty days from the date of the issue of such order, appeal in writing to the Monetary Board and the Board shall render its decision within fifteen days of receipt of such appeal. | | |
| | (3) In order to comply with a direction issued to it under paragraph (d) of subsection (1), a licensed specialised bank may direct a person holding shares in such bank to reduce the number of shares held by such person in such bank, whether such shares were acquired by such person before or after the date of commencement of this Part of this Act, within such period as may be specified in such direction ; and it shall be the duty of such person to comply with such direction. | | |
| | (4) The licensed specialised bank or a shareholder who fails to comply with a direction given to it or him under subsection (1) or subsection (3), as the case may be, shall be guilty of an offence under this Act, and shall on conviction after summary trial by a Magistrate be liable to imprisonment for a term not exceeding eighteen months or to a fine not exceeding one thousand rupees or to both such imprisonment and fine. | | |
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| 76L.
| | (1) The Director of Bank Supervision may at any time, examine or authorize any officer of his department to examine, the books and accounts of any licensed specialised bank. | | |
| | (2) The report on any such examination shall be furnished to the Governor of the Central Bank by the Director of Bank Supervision as soon as such examination is completed. The Director of Bank Supervision may recover the costs of such examination from the licensed specialised bank. | | |
| | (3) It shall be lawful for the Director Bank Supervision or any officer authorized by him-
| | | (a) to administer, in accordance with the Oaths Ordinance, oaths or affirmation to any director, manager, secretary, employee or auditor of any licensed specialised bank; |
| (b) to require any director, manager secretary, employee or auditor of any licensed specialised bank to furnish all such information relating to the affairs of the bank, as the Director of Bank Supervision or any officer authorized by him may consider necessary to ascertain, for the purpose of this Part of this Act. |
| (c) to require any director, manager. Secretary, employee or auditor of any licensed specialised bank tea produces for inspection any book Records or document relating to the affairs of the bank, in his possession or custody, which is likely to contain any such information; |
| (d) in any case where there is evidence of mismanagement by a licensed specialised bank, to require any director, manager or secretary of such bank to submit the accounts of the bad for audit by an auditor authorized by the Director of Bank Supervision and to require the bank to furnish such information or produce such books, records or documents and to pay such fees, as may be specified or authorized by the Director of Bank Supervision to such auditor. |
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| | (4) It shall be the duty of every director, manager, secretary, employee or any auditor of any licensed specialised bank to comply with any requirement imposed on him under this section and to afford to the Director of Bank Supervision or to any officer authorized by him or to any auditor authorized by him under paragraph (d) of subsection (3), access to all books and records of that licensed specialised bank including its cash balances, assets and liabilities whenever requested to do so by the Director of Bank Supervision. | | |
| | (5) The Director of Bank Supervision may, where he considers it necessary to ascertain the true condition of the affairs of a licensed specialized bank and to ascertain whether such bank is carrying on business is a manner detrimental to its present or future depositors, by notice in writing require any person whom he considers to haw information relating to the licensed specialised bank, to furnish such information to him or to any officer authorized by him or to any auditor authorized by him under paragraph (d) of subsection (3) or to attend in person before hint or any officer authorized by him at such place and at such date and time as may be specified in such notice, so that the person may be examined on such matters as may be specified in such notice. | | |
| | (6) For the purpose of ascertaining the true condition of the affairs of the licensed specialised bank, the Director of Bank Supervisor may if he thinks it necessary for the purpose of an examination under subsection (5), also examine the business of any company which is or has at any relevant time been-
| | | (a) a holding company or subsidiary company of the licensed specialised bank under examination ; |
| (b) a subsidiary company of a holding company of the licensed specialised bank; |
| (c) an associate company of that licensed specialized bank, |
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| | (7) Any person who falls to comply with any requirement imposed on him by the Director of Bank Supervision under subsections (5) or (6) shall be guilty of an offence under his Act. | | |
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| 76M.
| | (1) In any case where the Director of Bank Supervision is satisfied after examination by him self or by any officer authorised by him, of the affairs of a licensed specialised bank, or upon information received from the bank' that it is insolvent or is likely to become unable to meet the demands of its depositors or that its continuance in business is likely to involve loss to its depositors or creditors, the Director of Bank Supervision shall malts a report accordingly to the Governor of the Central Bank for submission to the Monetary Board; and if such Board, upon review of the facts and circumstances, is of opinion that action should be taken as hereinafter provided, the Monetary Board may make an order directing the bank forthwith to suspend business and direct the Director of Bank Supervision to take all measures as may be necessary to prevent the continuation of business by such bank. Any person who obstructs the Director of Bank Supervision from taking such manners to prevent the continuation of business by the company shall be guilty of a offence under this Act. | | |
| | (2) Notwithstanding anything in any other law, no action or proceeding may be instituted in any court for the purpose of securing the review or revocation of any order made good faith under subsection (1) or in respect of any loss or damage incurred, or likely or alleged to be incurred by reason of such order. | | |
| | (3) An order made by the Monetary Board under subsection (1) in respect of any licensed specialised bank shall cease to have effect upon the expiration of a period of sixty day from the date on which it is made and it shall be the duty of the Monetary Board as soon as practicable and in any event before the expiration of such period-
| | | (a) to make an order permitting the bank to resume business, either unconditionally or subject to such condition, as the Monetary Board may consider necessary in the public interest; of in the interest of the depositors and other creditors of the bank; or . |
| (b) to cancel the licence issued to such licensed specialised bank, and-
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| | (4) The provisions of section 66 of this Act shall apply in relation to the priority fill claims in a winding up proceedings of company referred to in sub-paragraph (a)of paragraph (b) of subsection (3). | | |
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| 76N.
| | (1) Notwithstanding the provision of this Act or of any other written law to that contrary or the Memorandum and Article of Association of a licensed specialised bank the Monetary Board may, where an order ha been made by the Board under paragraph (c) of subsection (3) section 76M.
| | | (a) make such arrangements as it considers necessary for the amalgamation of the licensed specialised bank with another licensed specialized bank or any other institution, with the consent of such other specialised bank or institution; |
| (b) re-organise such licensed specialised bank by increasing its capital and arranging for new shareholders and by reconstituting, its board of directors ; or |
| (c) re-construct the licensed specialized bank in any such manner as it considers to be in the interest of depositors, including the closing down of unviable sections of the business and re-organising the management. |
| (d) direct any shareholder of any licensed specialised bank to divest or transfer the ownership of the shares owned by him, to a person nominated by the Monetary Board, on payment by such person of compensation determined as follows:-
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| | (2) A shareholder who fails to comply with a direction given to him under paragraph (3) of subsection (1) shall be guilty of an offence.'. | | |
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Sri Lanka Consolidated Acts