To facilitate the collection of information, the Central Bank has established an on-line Web-based reporting system through a central database for all licensed banks. The banks forward their periodic reports to the Central Bank through this system, which facilitates collation and analysis of the information for off-site surveillance and to pursue corrective action by banks. In this respect, technology has not only changed the way banking business is conducted, but also to modernize the supervisory and regulatory framework in Sri Lanka and elsewhere. 6.3 In addition to spearheading with the introduction of new technology platforms for payments, clearing and settlements, the Central Bank also established a conducive legal and regulatory framework for IT related operations in Banks. During 2002 – 2006, the Central Bank introduced several amendments to the Registered Stocks and Securities Ordinance, Local Treasury Bills Act to facilitate RTGS and SSS transactions. In addition, the Central Bank also passed a dedicated law, i.e. the Payments and Settlements Act to regulate the national payment system with enabling powers to the Central Bank to monitor and regulate new payments instruments, systems and service providers. This Act also includes appropriate provisions for customer rights. In the retail payments area, prior to the introduction of the cheque imaging system through LankaClear, the Central Bank initiated amendments to the Bills of Exchange Ordinance, and Evidence Law to enable cheque images be recognized in courts.
Central Bank initiatives  4.1 In the interest of the wider financial system stability, the Central Bank of Sri Lanka is responsible to ensure smooth, speedy and safe operations of the nation’s payment, clearing and settlement systems. Since 2003, the Central Bank has taken the lead to introduce an efficient and safe payment and settlements for both high value and time critical transactions by introducing the Real Time Gross Settlement (RTGS) system for interbank and third party customers. The RTGS system is a computer-based fund settlement system, which processes and settles each payment instruction individually and irrevocably on a real time basis, using funds in the participants’ RTGS Settlement Accounts or Central Bank funds provided under an intraday liquidity facility. At present, the value of transactions settled in the RTGS system accounts for about 81 per cent of the non-cash high value payments in Sri Lanka. The majority of RTGS transactions are on account of the inter-bank call money market, the government securities market, open market operations, the Rupee leg of transactions in the foreign exchange market, urgent and time critical payments of customers and net obligations under the clearing system operated by LankaClear Ltd, a venture jointly  2  BIS Review 13/2008  owned by the Central Bank and commercial banks. In early 2004, the Central Bank implemented the Scripless Securities Settlement (SSS) System for settlement of government debt instruments in electronic or scripless form and settlement of trades of such scripless securities on a Delivery Vs. Payment (DvP) basis.