objectives amendments to the existing banking of our country. we need to have a well - act. accordingly, steps will be initiated planned and an ambitious agenda for to streamline and strengthen the financial sector development and regulatory and supervisory framework reforms ranging across financial sector through the proposed banking act policies with a vision of innovative, amendments. we will consider robust and competitive financial provisions for reinforcing the central systems. banks ’ s enforcement powers for as a priority, we expect to strengthen the regulatory framework pertaining to all financial institutions, including licensed banks, licensed finance violations of the act and the directions issued under it. in this regard, we wish to seek views from the banking sector as well. companies ( lfcs ), specialised leasing in line with these reforms, we intend to companies ( slcs ) and primary dealers. it review all key regulations in the medium - will further ensure the stability of the term. in this regard, we will review key financial sector by promoting the safety banking act directions, such as share and soundness of those institutions to ownership, foreign borrowings, and face unforeseen challenges in the corporate governance, and these will be growing business environment. amended where necessary. in this regard, the central bank wishes to in order to maintain financial stability in implement the following policies in 2017 the country and in line with regulatory and beyond. reforms, we have identified the need for since the last amendment to the existing banking act in 2006, the banking sector landscape has undergone a significant central bank of sri lanka – road map 2017 further strengthening of the supervisory function of the central bank. accordingly, we expect to enhance the bank examination methodology to focus on the efficiency, effectiveness 2014 with a view to further and sustainability of individual banks and strengthening the resilience of licensed the banking sector, based on the bank banks. we have already issued directions sustainability risk index ( bsri ). on the basel iii liquidity coverage ratio accordingly, amendments will be in april 2015. introduced to the existing risk - based supervision framework based on a mix of quantitative and qualitative indicators to enhance focus on sustainability and operational efficiency of banks. we will conduct the pilot run of the risk index on large banks during we have just issued the direction on basel iii minimum capital requirements for implementation on a staggered basis, commencing 01 july 2017, and to be fully implemented by 01 january 2019 in line with the international timeline. the first quarter of 2017 and with a view to creating a more resilient subsequently, the index

proper grc processes in financial institutions. considering the fiduciary responsibility of the boards towards their stakeholders, and in the interest of wider financial system stability, the central bank issued directions on corporate governance in december 2007, requiring the banks to streamline their governance practices commencing from 2008. 3. 2 the implementation of the basel ii framework from january 2008 is another enhancement to the regulatory structure, which requires the financial industry to have a better risk management framework. most of the leading banks have set up independent risk management and compliance divisions to monitor bank - wide risks. these institutions should now focus in moving forward to implement advanced approaches under basel ii framework by setting up data warehouses and sophisticated it systems in order to have better risk management and compliance. similarly, the adoption of international accounting standards such as ias 32 & 39 and ifrs 7, which deal with disclosures, presentation, recognition and measurement of financial instruments, also highlight the need for an integrated risk management, disclosures and compliance. there is, however, reluctance by banks to build robust it infrastructure and advanced it frameworks due to the high cost of investment and the time it would take to reap the benefits. it is important that banks and financial institutions change this mindset to pave the way for a grc management and also to avoid operational losses due to product failures and frauds. risks arising in these areas could spread beyond the financial institution concerned and have the potential to affect the entire industry. 4. adopting an integrated grc framework is a challenge 4. 1 understanding the demands of the organization ’ s stakeholders is the key in terms of performance and conformance, and aligning the organization to deliver against these objectives. considering the risk appetite and risk tolerance of the organization, the processes and technology should be designed and deployed so that the achievement of objectives is measured, risks are assessed and continuous improvement is realized in support of effective grc. integrating grc has become a challenge for virtually every financial institution looking to establish an integrated and consistent approach to controlling exposures, managing risks and creating value. 4. 2 the major challenge in adopting an integrated grc approach is the aligning of the grc framework and processes to standalone and isolated solutions that are already in place. the difficulty is to integrate these isolated solutions through a flexible and add - on basis to embrace new requirements. changing core business solutions without overhauling business requirements is considered to be a nightmare by many financial institutions. if it is properly planned and designed, it would not be