Central Bank reaffirms Rs. 1.1 Mn deposit insurance coverage

• Fixed, savings and demand deposits covered, with foreign currency deposits paid in Sri Lankan rupee equivalent

By Shannine Daniel 

In a recent public notice on social media, the Central Bank reiterated that depositors in licenced commercial and specialised banks and licenced finance companies are automatically insured under the Sri Lanka Deposit Insurance Scheme (SLDIS), administered by the Central Bank.

The Central Bank informed the public via the notice that if the financial licences of any of any financial or banking institutions are cancelled, compensation will be paid up to a maximum of Rs. 1.1 million per depositor, per institution for eligible deposits.  The equivalent will be provided in Sri Lankan Rupees for foreign currency deposits.  Moreover, joint account holders will be treated separately, with each account holder eligible for compensation up to a maximum of Rs. 1.1 million for all eligible deposits in the institution. All fixed, savings and demand deposits are protected under the SLDIS. 

According to the SLDIS website, the compensation payable will also include any interest accrued as at the date of the member institution’s licence cancellation.

No interest will be paid for the succeeding period.

The SLDIS covers deposits held by an individual, joint venture, sole proprietorship, corporate to name a few, but excludes non-eligible deposits mentioned in section 43(3) of the Banking (Special Provisions) Act, No. 17 of 2023. In accordance with the Banking (Special Provisions) Act No. 17 of 2023, the depositors must submit a duly completed claim for compensation within six years from the date of the member institution’s licence cancellation.

Moreover, as stated on the SLDIS webpage, in the case of several beneficiaries for a deceased depositor’s claim, the individual payment up to Rs. 1.1 million will be proportionately divided among the beneficiaries, according to their share of the total deposits.

The SLDIS was introduced by the Central Bank in October 2010, under the Sri Lanka Deposit Insurance Scheme Regulations of the same year. 

This scheme was implemented to ensure overall financial system stability in the country, protect depositors from failed financial institutions and support the stability of financial institutions by maintaining depositor confidence.

According to the Central Bank’s recent social media post, all licenced commercial and specialised banks and licenced finance companies contribute to the SLDIS under the Deposit Insurance Mechanism.

The names and details of these licenced banking and financial institutions can be found on the Central Bank’s website, along with the names and details of other authorised financial institutions. 

More information can be obtained from SLDIS webpage and the Central Bank’s Deposit Insurance and Resolution Department (Telephone: 011 247 7261 Email: [email protected] and [email protected]).