Dr. Ranee Jayamaha


Dr. Ranee Jayamaha was awarded her first degree, BA (Hons) in Money and Banking from the University of Ceylon, Peradeniya in 1970. She was a lecturer in the Department of Economics at the University of Peradeniya for a year and then joined the Economic Research Department (ERD) of the Central Bank of Sri Lanka (CBSL) in 1971, as an Economist. Thereafter, she received a British Council scholarship and proceeded to the University of Sterling, Scotland, UK to read for a two-year (1975-1976) Master’s Degree.

She was awarded the MSc in Economics in 1976 and upon her return to the CBSL, she was promoted as a Senior Economist in the Money and Banking Division of ERD. Later, she was promoted to the post of Deputy Director, in charge of several divisions in ERD. In 1987, she proceeded to the University of Bradford, UK to read for a PhD. Dr. Jayamaha returned to Sri Lanka in 1989 with a PhD in Monetary Economics and was promoted to the post of Director at the Banking Development Department of CBSL.

In 1992, Dr. Ranee Jayamaha was released to the Presidential Secretariat to work as the Secretary to the Presidential Commission on Finance and Banking (PCFB). She worked on this assignment for three years. Thereafter, she was released to the Ministry of Finance (MOF) to implement the recommendations of the PCFB. Accordingly, during 1993-95, Dr. Jayamaha worked as an Advisor to the Financial Sector Reform Committee in the MOF. Upon completion of this assignment, Dr Jayamaha was offered an Advisory post in the Commonwealth Secretariat (COMSEC), London, UK. She was on release by the CBSL and during mid 1995- 1998 she worked as an Advisor (Economic). Later, she was promoted to the grade of Special Advisor (Economic) at the COMSEC.    

At COMSEC, Dr. Jayamaha had to learn new areas of work and advise member countries in the Commonwealth. One such work area was Payment and Settlement System Reforms. According to Dr Jayamaha, at that time, she was only conversant of the basics of payment and settlement systems and therefore had to study hard to understand concepts and operational issues relating to payment and settlement reforms. Initially, she worked on the payment and settlement system reforms in the Eastern Caribbean Central Bank (ECCB) which covers central banking operations of eight small islands in the Caribbean. Dr. Jayamaha reminisces that she was a member of a very professional team and learned a lot on the job. The payment reform committee consisted of renowned international experts on the subject: a payment system expert from the World Bank, an industry expert (retired from the Bank of England). Dr Jayamaha commenced work and made a number of practical recommendations to reform the payment and settlement systems of the ECCB, which were implemented in stages by the authorities. This was Dr. Jayamaha’s first hands-on experience in reforming payment and settlements. In 2000, CBSL requested technical assistance from the COMSEC to review its payment and settlement systems and make recommendations for reform. Dr Jayamaha managed to get the same expert team for the purpose and submitted a comprehensive report to CBSL. The then Monetary Board accepted almost all recommendations of the report and opined that suggested reform process should be implemented to elevate Sri Lanka’s payment and settlement systems to international standards.

Dr. Jayamaha reverted to her substantive position at CBSL in 2001 and was promoted as the Assistant Governor in charge of several departments, including the Information Technology Department of the CBSL. By that time, CBSL has already embarked on a Central Bank Modernization project under which there was a component for payment and settlement systems reforms. The CBSL modernization program was funded by the World Bank through a loan to the Government of Sri Lanka (GOSL).

Payment and Settlement System in the CBSL

The two main payment systems (systemically important payment systems-SIPS) in the country were: the large value payment system (money, foreign exchange, inter-bank and time critical payments) and the retail value payment system (cheques, SLIPS, limited amount of international card payments and in -country drawn US dollar cheques). CBSL owned and operated both these SIPS. While the then Banking Department was handling the high value (large value) payments and settlements, the retail value payments and settlements were operated by the Sri Lanka Automated Clearing House (SLACH) under the guidance of CBSL’s IT Department.

The SLACH, set up in 1987 cleared retail value cheques and SLIPS. Both these were paper-based payment instruments. The SLACH, through Reader-Sorter machines (semi-automated) sorted cheques on a bank-wise basis and the cleared net balances were sent to CBSL same night for settlement. CBSL settled net clearing balances of banks across their respective accounts held in the CBSL’s general ledger (GL). The settlement process was known as “end of day net settlements’’ which entailed several settlement risks to individual banks and to CBSL as there was no loss sharing agreement between or among banks. if a bank were to be liquidated or had a court order to stop business, CBSL’s overnight overdrafts to the bank concerned would have been at risk. CBSL’s GL was manually posted until midnight each business day, after the closure of business by banks. If any of the banks were short of settlement funds, CBSL provided such bank with an overnight overdraft facility to enable it to settle its payment obligations. CBSL was exposed to the funds-deficient bank overnight or until such time the relevant bank paid its dues to the CBSL. Although CBSL had not given an undertaking that it would meet payment obligations of individual banks, knowingly or unknowingly, CBSL absorbed payment and settlement obligations of banks. From a practical point of view, CBSL has no option but to accommodate deficient banks in the interest of the financial system stability. Prior to reforms, payments and settlements were affected manually or through partly automated archaic infrastructure and processes. Inside the CBSL too, payments were scattered among several departments. High value payments of banks were settled manually via their accounts maintained in the books of the CBSL. For retail payments, there was no loss sharing arrangement among banks or a guarantee that all banks would be settling their payment obligations. As a result, CBSL was exposed to payment obligations of third parties. Hence was the necessity to reform both high value and retail payments and fully automate them to facilitate payment and settlement transactions.

Real Time Gross Settlement System (RTGS)

CBSL commenced reforming the high value payment systems by replacing the end of day net settlement system with the RTGS. Under the end of day net settlement system, all payment transactions were netted and posted to accounts of various banks which were on CBSL’s GL. All banks were given a seat on the RTGS system and banks submit payment instructions to CBSL online using local area network systems. When payment instructions are received from banks, if funds are available in their respective bank accounts, the RTGS would go through an iterative process and settle payments instantaneously.

Such settlements are final and irrevocable. This meant that the banks were required to keep adequate balances in their reserve accounts in CBSL for settlements. If there were no funds or insufficient funds, the RTGS would place such transaction instructions on a queue and provide time for the bank concerned to fund its account. To facilitate banks to effect instant transactions on a gross basis, CBSL provided a collateralized intra-day liquidity facility (ILF) to banks which should be paid back at the end of the business day. Banks therefore were not inconvenienced due to gross settlements, but they are required to find collateral to borrow under the ILF, which is an interest free facility. Under the RTGS system, banks are made fully responsible for their payment obligations, no bank is exposed to another. CBSL is not exposed to any bank either. The RTGS, thus modernized and digitized the country’s archaic high value payment and settlement system.

In implementing the RTGS system, CBSL called for bids and there were 13 such bids. Finally, in line with CBSL’s specifications and World Bank guidelines, Logica UK Limited was selected to implement the RTGS system. With the introduction of the RTGS system, several processes and procedures had to be changed. Banks used to bring to CBSL large value cheques for clearance. But with RTGS, banks were given online access to their reserve accounts and transactions get cleared instantaneously if instructions are correct and if banks have funds in their accounts. The RTGS is an interactive iterative system. It could check the bank’s debit or credit balances and ascertain fund availability. If there were no funds, then the transaction would be held on the queue until funds are available in the respective bank’s/primary dealers’ account or is rejected at the end of the business day. If the transaction does not get through, finding adequate funds is the respective bank’s problem and not the problem of the receiving bank or the CBSL. RTGS thus is a speedy, efficient and a relatively risk-free system.

It took CBSL two years – from mid 2001 to 2003 – to implement the RTGS system. Settlement of payments was done on real time and all banks were linked to the RTGS system. Billions of money and forex market transactions go through the RTGS system instantaneously and securely with zero risk. Initially, banks protested and CBSL had to make it mandatory for banks to join the system. RTGS, which was introduced on 8th September in 2003 is clearly a landmark development in the payment history and the digitization of financial services in Sri Lanka.

Simultaneously, the CBSL GL was automated and the newly created Finance Department centralized all payments and settlements in that department.

The scripless securities settlement system (SSSS)

CBSL required the selected vendor to provide both RTGS and SSSS components and to link both systems to ensure that securities transactions are also made risk free, speedy and efficient.

Treasury bills and Treasury bonds are issued by CBSL on behalf of GOSL. Prior to 2004, the sale and transfer of Treasury bills and Treasury bonds were done manually with attachments to the original bill itself as transferors had to physically endorse such transfers. It took several days to notify the purchasing customer of the transfer of ownership of bills and bonds. The trading was very difficult under the manual system due to physical endorsements on each trade or transfer. The markets did not grow due to the cumbersome payment and settlement system of T bills and bonds and risks of not having an instantaneous finality of trades or transfers.

The SSSS was also developed simultaneously with the RTGS but due to the delay in passing relevant laws and linking authorized primary dealers on to the system, it was not possible to implement both RTGS and SSSS at the same time. There are two legs in settling a securities transaction: the first is the purchase of securities by the primary dealers for themselves or on behalf of their customers and the trading/transfer of such securities followed by a payment and settlement for such securities. The trading/transfer involves an ownership change and that must be done on a central depository by creating new accounts for both primary dealers and their beneficiaries. Primary dealers, including bank and non-bank primary dealers were licensed by the CBSL and they can maintain beneficiary accounts on behalf of their clients. Each dealer is given a seat on the SSS and RTGS systems. The other leg is the settlement of payments incurred in purchasing or trading/transferring which is implemented through the RTGS system that enables the finality of the settlement. The payment leg and settlement legs are linked. Payment is done instantaneously depending on the availability of funds in respective accounts of primary dealers and only if relevant and tradable securities are available. If primary dealers are short of funds for settlement, they are also given an ILF until the close of business hours. If ILF is not returned by the close of business day, CBSL imposes a penalty on the primary dealer as is the case for banks. Installation of the SSS was more complicated as CBSL had to deal with non-bank primary dealers who are not regular clients of CBSL. They too had to be given seats on both the RTGS and SSS systems by opening accounts in the CBSL and they often lacked collateral for ILF. When the SSSS was introduced, both primary and secondary Treasury bill and bond transactions improved significantly and markets improved due to speedy, safe, risk free and efficient Treasury bills and bonds transactions.

The SSSS leg went live in 2004. CBSL had to dematerialize all scrip-based Treasury bills and Treasury bonds issued and outstanding, and that took some time. All dematerialized bills and bonds had to be entered on to the SSSS system. Government also had to amend the Registered Stocks and Securities Ordinance and Local Treasury bills Ordinance. Following the implementation of the SSSS, the issue and trading of such instruments were done digitally with no paper trail on an automated trading platform. Reforming the RTGS system for payments and the SSSS for Treasury bills and Treasury bonds ensured enormous benefits to customers and primary dealers. Successful Implementation of the SSSS was another landmark achievement in the payment and settlements and the securities market development history of Sri Lanka.

Retail Payments and LankaClear

LankaClear (Pvt) Ltd was incorporated in February 2002 under the guidance and supervision of CBSL and as a joint venture between licensed banks and CBSL. LankaClear is the authorized clearing agent of CBSL, which facilitates the clearing of low value or retail and bulk payments. The IT Department of CBSL assisted SLACH from 1987 onwards and LankaClear until 2006, facilitating the clearing of cheques and later SLIPS, using Reader-Sorter machines during the day and submitting aggregate net clearing balances to CBSL. After verifying and formatting such data to facilitate settlements, the IT Department submitted clearing balances to the then Banking Department (Payments and Settlement Department after 2002) of the CBSL. As mentioned earlier, prior to RTGS, CBSL manually settled net clearing balances of banks across their accounts held at CBSL. The clearing time of cheques varied between 1-7 days and some banks benefited during the transition by using ‘’the cheque float’’ for overnight or short-term lending purposes. During the terrorist war period, transferring physical cheques to the North and the East took 4-5 days or more.

As there were no loss sharing arrangements among banks in Sri Lanka, had there been a collapse of a domestic bank or a foreign branch overnight, there would have been serious repercussions on all other banks as their payment and settlements would get held up until some arrangement is put in place. On the other hand, CBSL was exposed to the bank which is fund deficient. CBSL however, would be the lender of last resort although it has no obligation to meet third party payment liabilities.

SLACH was partly automated and did not have the capacity to clear imaged balances of cheques or provide online clearing services. Therefore, after automating the high value settlements, CBSL decided to automate and digitize retail payments and clearing by establishing a National Switch in the country. Consequently, quotations were requested from vendors and the hardware and the software were replaced with new infrastructure that enabled clearing of imaged and truncated cheques and provided central clearing for other payment instruments such as, SLIPS, cards, ATM balances, mobile clearing and electronic fund transfers through the National Switch.

Under the payment and settlement reform project, CBSL introduced the cheque imaging and truncation system (CIT) in 2006, replacing the Reader-Sorter machines. Accordingly, all cheques accepted by banks for payment should be truncated at the branch level and a CD containing the debit and credit balances of banks were forwarded for clearing to LankaClear. Now, LankaClear has mandated the banks to use application process interfaces (APIs) and send details of truncated and imaged cheques and their balances online to LankaClear. LankaClear clears these debit and credit balances, prepares aggregate net balances of each bank and forwards same to the Payments and Settlement Department of the CBSL for final settlement across banks. As mentioned earlier, if there are funds in the account of the respective bank/s, the RTGS system settles banks’ balances across their accounts and enables banks to know their clearing balances before start of business by 8.30 am on each business day. The CIT system in Sri Lanka was the first in Asia that facilitated the digitized retail payments and settlements.

In addition to clearing of cheques on the CIT system, one of the first tasks carried out by LankaClear was to connect all the ATMs of the banks. The banks initially protested because they wanted to continue with their own stand-alone ATM switches. Gradually, many banks joined the National Switch which is considered speedier and safe. Today, the LankaClear Switch clears cheques, SLIPS, locally drawn US dollar cheques, mobile payments of banks and non-bank operators, LankaPay card balances, electronic fund transfers among LankaClear members and has expanded its services to a wide range.


For many years, Sri Lanka did not have an institution which was accredited and authorized to certify digital signatures for security documents, clearing letters of credit etc. Digital signatures had to be secured from a foreign institution which was authorized for the purpose. A significant amount of foreign exchange was spent on this procedure. After many requests and preparatory work, LankaClear was authorized to certify digital signatures. LankaClear is now the financial sector Certification Service Provider. While providing a speedy and safe digital signature certification service for domestic and cross border transactions, LankaClear has been instrumental in saving foreign exchange for the country.

Dr. Ranee Jayamaha is greatly appreciative of the past and present LankaClear Governing Boards, management and staff who have contributed to elevate the profile of LankaClear to international standards.

Legal and Regulatory Framework for payments and settlements.
The Payments and Settlements Act of 2005

Under the previous systems and infrastructure, legal backing for payments, securities clearing and settlement was given by the relevant sections of the Monetary Law Act, Banking Act, the Local Treasury Bills Ordinance, and the Registered Stocks and Securities Ordinance. In addition, the Bills of Exchange Ordinance and Evidence Law also had relevant clauses for cheque transactions.

When the payment and settlements were automated and digitized, it was cumbersome to deal with several Acts. Also, digitized and imaged payment instruments did not have legal cover. CBSL therefore decided to amend relevant sections of the existing Acts and introduce new Acts that facilitated automated and digitized new payments and settlement systems. The Payments and Settlement Act of 2005 was a dedicated Act which enabled the implementation of payment and settlement reforms and made cross references to the other Acts where necessary. Sri Lanka was the third country in the Asia and Pacific, after Singapore and Australia, to enact this very comprehensive law on payments and settlements.

The e-Transactions Act no. 19 of 2006

This Act is based on the standards established by the United Nations Commission on International Trade Law (UNCITRAL) Model Law on e-Commerce, (1996) and Model Law on e-Signature (2001). It facilitates domestic and international electronic commerce by eliminating legal barriers and establishing legal certainty; and encourages the use of reliable forms of electronic commerce. The ICT Agency (ICTA) of Sri Lanka sent the draft legislation to CBSL before finalization. Sri Lanka ratified the UN Electronic Communications Convention, the only international treaty on the use of cross border e-commerce contracts – this initiative was led by the ICTA.

Other relevant legislation included the Payment Device Frauds Act; the Prevention of Money Laundering Act; the Financial Transactions Reporting Act and the ratification of the Terrorist Financing Convention.

Dr. Jayamaha recalls that in drafting this Law, CBSL, ICTA and LankaClear worked together. Dr. Jayamaha opines that all the hard work is paid off now as Sri Lanka’s payment and settlement laws and regulations are recognized internationally.

Credit Information Bureau

When Dr. Ranee Jayamaha was Deputy Governor of the Central Bank, in charge of Financial Systems Stability, she was also the Chairperson of the Credit Information Bureau (CRIB). CRIB, at that time was posting all reports manually and there were many complaints that CRIB reports were not that accurate. In view of this, CRIB decided to automate and digitize its operations and enable it to produce speedier and accurate credit reports online. Each bank was instructed to enter outstanding and non-performing loan profiles of their customers by its own officials rather than sending such information for the CRIB to enter. Once customer information from all relevant banks are received, CRIB collates such information and prepares aggregate credit reports of customers. On demand, CRIB will make such formation available to relevant customers or to banks or financial institutions which are members of the CRIB. All banks and financial institutions are expected to maintain secrecy about customer credit reports and CRIB provides only data and information without making any reviews or comments on customer profiles.

The archaic infrastructure of the CRIB was replaced during 2006-08 and the institution now provides a speedy and reliable credit reports of customers.

Looking back on many years of valuable and beneficial service at the Central Bank, Dr. Jayamaha states that she always preferred modernizing and transforming systems, the architecture and addressing the legal and regulatory issues to provide an improved, speedier and more secure service.

At Hatton National Bank (HNB)

After retiring from CBSL, Dr. Jayamaha worked for the Presidential Secretariat and in 2011 she was posted as Chairperson of HNB. There, she ensured that HNB falls in line with other banks and joins the National Switch operated by LankaClear, while encouraging the Bank to move forward with digitized solutions and getting rid of inefficient paper-based payment instruments, such as cheques. She had a four-year stint at HNB.

Other assignments

Thereafter, Dr. Jayamaha was appointed as a Lead Consultant for South Asia -World Bank Group. One of her first assignments was to review the payment and settlement system in the Maldives. By 2015, the high value payment system in the Maldives was already digitized but had some operational issues. The retail payment and settlement transactions were inefficient and costly for customers especially due to the widely spread 200 inhabitable islands. Dr. Jayamaha recalls that it was very difficult to bring cheques on time to the central clearing house in Malé and to make available cash to people living far away in remote islands. Therefore, the World Bank team decided to reform the retail payment system by introducing a mobile payment system operated by two non-bank telephone companies. The World Bank team also drafted a Payments and Settlements Act for the Maldives but the Act is yet to be passed by the Parliament. As to the high value payment system owned and operated by the Monetary Authority of the Maldives, necessary modifications were effected during 2017-2018.


Dr. Ranee Jayamaha finally states that the buzz word today is crypto-currency to be issued by Central Banks. Central Banks in several developed countries have done comprehensive groundwork and they are ready to issue central bank digital currencies (CBDCs) soon. In several highly digitized Scandinavian countries the demand for paper currencies have been on the decline. People’s preference is to transact through non-cash payment instruments, mobile and card payments in particular.

These countries have now planned to issue CBDCs as legal tender although no country in the world has issued CBDCs to date. In the Asian region, Singapore is getting ready to issue crypto currencies. The issue of CBDCs is the result of the emergence of many private crypto currencies, such as Bitcoin, which have been subject to wide fluctuations, thus threatening the financial stability in some countries. While recognizing and endorsing the merits of issuing CBDCs, it is best to study the subject and see how best to handle operational issues rather than Central Banks in relatively less digitized countries jumping onto the band-wagon. There are many operational issues in the implementation of CBDCs as Central Banks are required to handle the mining of digital currencies and distributing same as legal tender. If the digitization process in the country concerned is at an advanced stage, it is easier for Central Banks to operationalize CBDCs. In countries where digitization is still at a rudimentary or undeveloped level, it is premature to make CBDCs legal tender. There is a significant amount of preparatory work that must be done by Central Banks in relatively non-digitized countries. They should avoid herd instincts and start making preparatory work on policy thinking, educate the public on the merits of issuing CBDCs and study all operational issues prior to the issue of CBDCs. It should also be debated whether Central Banks should compete with commercial banks in undertaking the distribution of CBDCs.

As to the future, Dr Jayamaha is interested in working on a CBDCs project of a Central Bank as digitization of national currencies is the order of the day.


Article by Ms. Janakie Mampitiya published in the Central Bank publication “60th Anniversary Commemorative Volume of the Central Bank of Sri Lanka, 1950 – 2010”.