The RTGS system will facilitate large value fund transfers and settlements on an electronic basis in real time rather than settling at the end of the day. It will expedite fund transfers among banks, primary dealers, financial institutions, investors, customers, the government and the public. This system will also bring about financial discipline in the banking sector since banks will have to maintain adequate cash and reserves in their accounts to meet their payment obligations, as the system will instantaneously update their bank accounts for each transaction. This will improve the liquidity management of banks as treasurers and fund managers will have to provide more accurate estimates of their payment obligations.

CBSL also intends to implement the Scripless Securities Settlement System (SSSS) in the last quarter of 2003. Until such time, the new system will enable the operation of the real time settlements of large payments combined with semi-automated settlement of government securities with scrips. The proposed SSSS, which deals with securities settlements, would facilitate the transfer of securities from one investor to another, together with a simultaneous transfer and settlement of funds through the RTGS. Sri Lanka’s RTGS/SSSS schemes are known as “LankaSettle”.

All payments and settlement instructions will be sent through the SWIFT system, which is considered to be the world’s most safe and secure communication system, thereby ensuring the security of the transactions routed through this system. For other messages banks and primary dealers can use the wide area network that is operated by the CBSL.

Along with the RTGS system, the CBSL goes live with many of the components of the automation of the General Ledger (GL) system for the Bank. The manual and semi-manual financial systems adopted at the Bank for maintenance of its accounts during the last 5 decades will be fully automated as of today and it will be integrated to the RTGS system. This will ease the financial and accounting operations of the Bank. It will also facilitate the creation of a management information system (MIS) and assist in the generation of ad-hoc reports for the management, auditors, and relevant authorities.

These systems developed under the new technology, will provide the CBSL with the state of-art systems that are in par with those implemented in the developed world. Once the integrated system goes live with both RTGS, SSSS with SWIFT communication coupled with a fully automated GL and a Treasury module, the CBSL would be the first in the region to adopt such a sophisticated system.

This project is a major component of the Central Bank Modernisation Programme which is jointly funded by the World Bank and the CBSL.