Coupled with the weaker debt repayment capacity of borrowers, Moody’s expects the move to cause a systemwide increase in the NPL ratio.
The Sri Lankan central bank has lowered the risk weights applicable to credit risk for foreign claims on the central government and residential housing loans.
The guidelines are mandatory and require immediate implementation. Three months' grace is given for a new cap on investment advisor commissions.
The SEC has asked the Colombo Stock Exchange to implement a broad programme to educate companies on the simplified processes and encourage them to list.
The interest rate cap is intended for housing loans for salaried employees, but CBSL has not indicated if it will apply to refinance loans.
The government has proposed tax incentives for newly-listed companies and investment in REITs, in addition to proposals to strengthen the banking sector.
Phase 2 will enable digital payments and smart wallets for CDS account holders, among a host of other features that will be made available electronically.
BSEC Executive Director Mohammad Saifur Rahman told Regulation Asia the pre-opening and post-closing sessions will be effective as early as next month.
"The market has evolved over the past ten years and technology has also raised the bar. There is a need to be in line with the times,” SEC Chairman Viraj Dayaratne told Regulation Asia.
The CBSL will have the ability to replace an institution's management, operate an agent institution and bail out an institution where necessary.