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Sri Lanka Financial Sector Modernization Project

Abstract*

The development objective of the Financial Sector Modernization Project for Srilanka is to contribute to increasing financial market efficiency and use of financial services among micro, small and medium enterprises (MSMEs) and individuals. The project comprises of three components. The first component, supporting selected mid-level reforms through results-based financing implements of selected mid-level reforms through disbursement-linked indicators...

* The project abstract is drawn from the PAD, SAR or PGD and may not accurately reflect the project's current nature

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Development Objective

The Project Development Objective (PDO) is “to contribute to increasing financial market efficiency and use of financial services among micro, small and medium enterprises (MSMEs) and individuals”. The project will achieve the PDO through modernizing financial market infrastructure, upgrading the legal and regulatory framework for the financial system, and strengthening the institutional capacity of financial sector regulators (Central Bank of Sri Lanka, [CBSL]; Securities and Exchange Commission of Sri Lanka, [SEC]; andInsurance Board of Sri Lanka, [IBSL]). On account of its comprehensive approach to creating an enabling environment for robust financial development, the project is also expected to advance financial inclusion through (a) increased financial efficiency and competition and (b) the greater reach and financial connectivity of MSMEs and individuals that the new and more inclusive financial marketinfrastructure shall enable.

Key Details

Project Details

  • P159303

  • Closed

  • Tatsiana Kliatskova

  • Democratic Socialist Republic of Sri Lanka

  • Sri Lanka

  • October 4, 2016

  • (as of board presentation)

    April 5, 2017

  • February 22, 2018

  • US$ 75.00 million

  • Central Bank of Sri Lanka,Securities and Exchange Commission of Sri Lanka,Sri Lanka Insurance Regulatory Commission (formerly known as Insurance Board of Sri Lanka )

  • South Asia

  • 2017

  • US$ 75.00 million

  • C

  • January 7, 2024

  • June 30, 2023

  • Yes

  • BANK APPROVED

  • Notes

Finances

Financing Plan (US$ Millions)

No data available.
Financier Commitments
IDA Credit 75.00

Total Project Financing (US$ Millions)

Product Line IBRD/IDA
IBRD Commitment N/A
IDA Commitment 75.00
IBRD + IDA Commitment 75.00
Lending Instrument
Grant Amount N/A
Total Project Cost** 75.00

Summary Status of World Bank Financing (US$ Millions) as of February 28, 2025

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No data available.
Financier Approval Date Closing Date Principal Disbursed Repayments Interest, Charges & Fees

Detailed Financial Activity as of February 28, 2025

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No data available.
Period Financier Transaction Type Amount (US$)
Jan 11, 2019 IDA-60060 Loan Disb 367,000.00
Jan 11, 2019 IDA-60060 Loan Disb 30,000.00
Jan 11, 2019 IDA-60060 Loan Disb 523,000.00
Jan 11, 2019 IDA-60060 Loan Disb 2,900,000.00
Mar 20, 2019 IDA-60060 Loan Disb 261,380.62
Apr 4, 2019 IDA-60060 Loan Disb 929,933.20
Apr 18, 2019 IDA-60060 Loan Disb 520,368.75
May 31, 2019 IDA-60060 Loan Disb 129,151.88
May 24, 2019 IDA-60060 Loan Disb 64,679.06
May 28, 2019 IDA-60060 Loan Disb 64,677.66
Mar 26, 2019 IDA-60060 Loan Disb 261,163.12
Aug 1, 2019 IDA-60060 Int Charges 7,514.30
Aug 1, 2019 IDA-60060 Int Charges 87,505.30
Aug 1, 2019 IDA-60060 Int Charges 88,604.54
Oct 10, 2019 IDA-60060 Loan Disb 128,233.13
Oct 8, 2019 IDA-60060 Loan Disb 64,039.69
Oct 8, 2019 IDA-60060 Loan Disb 64,039.69
Jan 29, 2020 IDA-60060 Loan Disb 64,454.53
Aug 1, 2024 IDA-60060 Loan Repay 1,013,518.40
Dec 29, 2023 IDA-60060 Loan Disb -1,602.22
Feb 1, 2024 IDA-60060 Int Charges 2,019.10
Feb 1, 2024 IDA-60060 Loan Repay 1,840,526.50
Feb 1, 2024 IDA-60060 Int Charges 82,194.19
Feb 1, 2024 IDA-60060 Int Charges 47,880.35
Apr 5, 2017 IDA-60060 Loan Commitment 75,000,000.00
Aug 1, 2024 IDA-60060 Loan Repay 4,987.59
Dec 29, 2023 IDA-60060 Loan Disb -232.11
Aug 1, 2024 IDA-60060 Int Charges 80,906.38
Aug 1, 2024 IDA-60060 Int Charges 15,294.72
Aug 1, 2023 IDA-60060 Int Charges 110,788.42
Aug 1, 2023 IDA-60060 Int Charges 47,556.69
Jun 6, 2023 IDA-60060 Loan Disb -2,772,982.00
Oct 19, 2023 IDA-60060 Loan Disb 30,250.99
Feb 1, 2023 IDA-60060 Loan Repay 1,833,393.90
Feb 1, 2023 IDA-60060 Int Charges 80,649.55
Feb 1, 2023 IDA-60060 Int Charges 103,347.68
Jan 31, 2023 IDA-60060 Loan Disb 152,302.00
Feb 1, 2023 IDA-60060 Loan Repay 38,489.08
Apr 27, 2023 IDA-60060 Loan Disb 1,149.00
Mar 29, 2023 IDA-60060 Loan Disb -200,544.06
Jan 26, 2023 IDA-60060 Loan Disb 495,937.75
Feb 17, 2023 IDA-60060 Loan Disb 3,733.00
Aug 1, 2023 IDA-60060 Loan Repay 1,855,498.40
Aug 1, 2023 IDA-60060 Int Charges 79,102.60
Feb 1, 2022 IDA-60060 Int Charges 153,284.94
Feb 1, 2022 IDA-60060 Int Charges 2,544.76
Feb 1, 2022 IDA-60060 Int Charges 83,549.29
Aug 1, 2022 IDA-60060 Loan Repay 263.70
Aug 1, 2022 IDA-60060 Loan Repay 1,834,515.00
Aug 1, 2022 IDA-60060 Int Charges 77,855.94
Aug 1, 2022 IDA-60060 Int Charges 177,910.48
Oct 19, 2021 IDA-60060 Loan Disb 519,158.72
Aug 1, 2021 IDA-60060 Int Charges 1,409.50
Aug 1, 2021 IDA-60060 Int Charges 88,225.92
Aug 1, 2021 IDA-60060 Int Charges 133,973.39
Nov 29, 2021 IDA-60060 Loan Disb 2,097,060.00
Feb 22, 2022 IDA-60060 Loan Disb 514,091.40
May 31, 2022 IDA-60060 Loan Disb 4,208.00
Aug 1, 2020 IDA-60060 Int Charges 1,602.42
Mar 24, 2021 IDA-60060 Loan Disb 1,067,617.50
Feb 1, 2021 IDA-60060 Int Charges 6,312.87
Feb 1, 2021 IDA-60060 Int Charges 91,056.30
Feb 1, 2021 IDA-60060 Int Charges 120,651.49
Mar 12, 2020 IDA-60060 Loan Disb 11,253.99
Dec 18, 2019 IDA-60060 Loan Disb 129,326.25
Feb 11, 2020 IDA-60060 Loan Disb 64,208.44
Feb 18, 2020 IDA-60060 Loan Disb 128,146.88
Feb 1, 2020 IDA-60060 Int Charges 1,071.21
Dec 16, 2019 IDA-60060 Loan Disb 64,803.28
Dec 16, 2019 IDA-60060 Loan Disb 64,803.28
Feb 1, 2020 IDA-60060 Int Charges 86,972.80
Feb 1, 2020 IDA-60060 Int Charges 105,748.59
Aug 14, 2020 IDA-60060 Loan Disb 8,185.00
Aug 1, 2020 IDA-60060 Int Charges 88,478.32
Aug 1, 2020 IDA-60060 Int Charges 113,283.15
Feb 22, 2018 IDA-60060 Loan Disb 200,593.70
Feb 22, 2018 IDA-60060 Fee Charges 200,593.70
Aug 1, 2018 IDA-60060 Int Charges 128,097.66
Aug 1, 2018 IDA-60060 Int Charges 2,883.85
Feb 1, 2019 IDA-60060 Int Charges 1,354.52
Feb 1, 2019 IDA-60060 Int Charges 95,490.91
Feb 1, 2019 IDA-60060 Int Charges 2,707.64

Footnotes

Ratings

IMPLEMENTATION RATINGS

Name Review Date
Financial Management Satisfactory 2023-01-16
Project Management Moderately Unsatisfactory 2023-01-16
Monitoring and Evaluation Moderately Satisfactory 2023-01-16
Procurement Moderately Satisfactory 2023-01-16
Overall Implementation Progress (IP) Moderately Unsatisfactory 2023-01-16
Progress towards achievement of PDO Moderately Unsatisfactory 2023-01-16

COMPLETION RATINGS

INDICATORIMPLEMENTATION COMPLETION & RESULTS REPORT: 01-16-2024
OutcomesHighly Unsatisfactory
Risk to Development Outcome
Bank PerformanceUnsatisfactory
Borrower Performance
Government Performance
Implementing Agency

INDEPENDENT EVALUATION RATINGS

INDICATORICR REVIEW: 05-03-2024PROJECT PERFORMANCE ASSESSMENT REPORT:
Outcome RatingHighly Unsatisfactory N/a
Risk To Development OutcomeN/a
Bank PerformanceUnsatisfactoryN/a
Borrower PerformanceN/a
Government PerformanceN/a
Implementing AgencyN/a
Icr QualitySubstantialN/a
M&e QualityNegligibleN/a

Results Framework

PROJECT DEVELOPMENT OBJECTIVE INDICATORS

INDICATORBASELINECURRENTTARGET
  • (1) Increased transactions of retail electronic payments on the modernized infrastructure (measured by the cards issued under NCS to total debit cards in the system– target 15%)Value1.000.631.00
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Increased participation (trading) in the secondary market Central Government bonds (measured by the growth in secondary market trades of Central Government Debt in value terms—target 5%)ValueLKR 6,591 BillionLKR 26,080 bnLKR 2024 billion
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • (3) Increased share of private insurance companies (newly issued) insurance policies (measured by the growth of insurance premiums to GDP—target 3%)Value1.051.101.21
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment

INTERMEDIATE RESULTS INDICATORS

INDICATORBASELINECURRENTTARGET
  • Citizen engagement indicator of percentage of project beneficiaries that feel project activities/services/results reflected their needs.Value0.0075.000.00
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Central Counter Party system established for the securities marketValueNon operationalThe policy framework was approved. The CSE is in tnon-operational
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Regulatory and supervisory framework for financial consumer protection established and in useValueNon-existentMonetary Board approved the FCP regulations on 18 non-existent
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Outstanding MSME Loans from commercial banks (Note: Value of total loans granted by commercial /development banks)ValuePublished disaggregated data not N/A.(total estiOutstanding MSME loans from licensed commercial baData collection on SME sector commenced.SME defin
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • CBSL has undertaken consolidated risk-based supervision of banks on both solo and group wide basis, and performs risk assessment ona stand-alone and consolidated basis (Basel Core Principles for effeValueNon compliantBank Supervision Department completed 1 consolidatCompliant.The CBSL produces two consolidated supe
    DateSeptember 1, 2016June 30, 2023December 31, 2021
    Comment
  • Year-end stock market capitalization (% of GDP)Value27.0018.8025.00
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Plans and reports are generated and discussed in a timely mannerValueProcurement Plans approvedProcurement Plans implemented; Operations Manual a
    DateSeptember 1, 2016June 30, 2023
    Comment
  • RTGS new system with multi-currency settlement and convertibility features and the Scripless Securities Settlement System (SSSS) with Central Depository System operationalValueNew system Not operationalRTGS test environment installed and testing in proNon-compliant
    DateSeptember 1, 2016June 30, 2023December 31, 2021
    Comment
  • Change in investment portfolio composition of EPF (% in government securities)Value90-95% in government securities93.9491.3 % in government securities
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Audit reports completed and submitted within six months of closing of the financial year.ValueNoneIUFRs submitted, audit reports submitted with dela
    DateSeptember 1, 2016June 30, 2023
    Comment
  • SEC’s regulatory framework and supervisory practices have a significantly high level of observance of the International Organization of Securities Commission’s (IOSCO) Objectives and Principles of SeValue3 of 38 principles fully implemented, 13 of 38 BroSecurities and Exchange Commission Act No. 19 of 23 of 38 principles fully implemented, 13 of 38 Bro
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • IBSL’s regulatory framework and supervisory practices have a significantly high level of observance of the International Association of Insurance Supervisors- Insurance Core Principles (IAIS-ICPs)ValueLargely observed (6 of 26 principles; partially obReview of all ICPs are being carried out by a commInsurance law drafted in line with ICPs - under re
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Regulatory and supervisory framework with proportionate risk-based supervision for microfinance established and operationalValueNon-operationalNon-compliantlaw passed, department established - not fully ope
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • CBSL & LankaClear Assessment of Observance of the CPSS_IOSCO Principles for Financial Market Infrastructures completedValueNot assessedCBSL completed the self-assessment of CPSS-IOSCO-Pnot assessed
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Outstanding MSME Loans from commercial banks by females (% of total commercial bank loans)ValueNot available/gender disaggregation not doneOutstanding MSME loans to females by LCBs – Rs. 49gender disaggregation not done hence data not avai
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Outstanding Microfinance lending from licensed microfinance institutionsValueNone (not licensed yet)None (not licensed yet)none - not licensed yet
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Outstanding Microfinance lending from licensed institutions to women (% of MFI loans)ValueNone (not licensed yet)None (not licensed yet)non - MFIs not licensed yet
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment
  • Outstanding Corporate Debt (% of GDP)Value1.000.932.00
    DateSeptember 1, 2016June 30, 2023April 5, 2019
    Comment