Gem Trading Bank

(1) The administration and management of the affairs of the Bank shall be vested in a Board of Directors (hereinafter referred to as the ” Board”) consisting of

(2) The provisions of the Schedule to this Act shall have effect in relation to the term of office of the directors of the Board, the remuneration payable to such directors, meetings of the Board and the seal of the Bank.

(3) The Board shall exercise, perform and discharge all powers, duties and functions conferred or imposed on, or assigned to, the Bank by this Act.

(a) to grant loans and other accommodation on securities and property (including gems, jewellery or precious metal ) and to give credit to persons, or companies on such terms as it may deem expedient, either with or without security, for the development of the gem industry or the jewellery industry ;

(b) to open, maintain and manage current, deposit, savings and other accounts ;

(c) to buy, stockpile and sell, or enter into such other dealings in, gems, precious metals and jewellery, as may be necessary for the discharge of its functions;

(d) to subscribe to, purchase or underwrite, the issue of, stocks, shares, bonds and acceptable instruments, of any company engaged in the gem industry or the jewellery industry ;

(e) to issue bid bonds and guarantees, in or outside Sri Lanka, on behalf of the gem industry or the jewellery industry;

(f) to accept, collect, discount, re-discount, sell or negotiate, in or outside Sri Lanka, bills of exchange or promissory notes arising out of transactions relating to the export or import of gems or jewellery, and to grant loans and advances, in or outside Sri Lanka, against such bills of exchange or promissory notes:

(g) to open, issue, confirm or endorse, letters of credit and to negotiate or collect, bills of exchange and other documents drawn thereunder, pertaining to the gem industry or the jewellery industry;

(h) to grant loans and advances, within and outside Sri Lanka, to any person engaged in the gem industry or the jewellery industry;

(i) to finance the export or import of, machinery and equipment, on an outright or lease basis to be used, for the gem industry or the jewellery industry ;

(j) to buy or sell, foreign exchange or enter into, dealings in foreign exchange, as may be necessary for the discharge of its functions, subject to the existing foreign exchange laws ;

(k) to acquire or purchase any movable or immovable property, used for the gem industry or the jewellery industry;

(l) to convert a part or whole of its loans to bonds or debentures issued by companies engaged in the gem industry or the jewellery industry, and to subscribe to bonds and debentures issued by companies engaged in the gem industry or the jewellery industry;

(m) to open accounts in commercial banks or any other financial institutions, in or outside Sri Lanka, or to make any agency arrangement with, or act as an agent or correspondent of, any commercial bank or any other financial institution, within or outside Sri Lanka ;

(n) to transfer for consideration, any instrument relating to loans or advances granted by it;

(o) to raise such sums of money, in or outside Sri Lanka, by way of loans or otherwise as may be necessary for discharging its functions;

(p) to hold stocks of gems and jewellery, for the purpose of trading, buffer stocks or otherwise or as may be otherwise necessary for the discharge of its functions ;

(q) to subscribe to, invest in, or purchase, stocks, shares, bonds or debentures to the extent necessary for the enforcement of a lien, pledge or contractual right;

(r) to undertake and finance, research, surveys, techno economic or any other studies, in connection with the planning, promotion and development of the gem industry or the jewellery industry;

(s) to provide technical, marketing, administrative and financial assistance of any kind to the gem industry and the jewellery industry ;

(t) to form such subsidiaries as are necessary for carrying out activities related to the discharge of the functions of the Bank ;

(u) to collect, compile and disseminate, market and credit information in respect of the gem industry or the jewellery industry ;

(v) to provide training facilities in marketing and valuation of gems and jewellery, banking and management, and allied subjects ;

(w) to provide re-finance facilities to any bank or financial institution approved by the Monetary Board, for the development of the gem or the jewellery industry ;

(x) to enter into and perform, all such contracts, whether in or outside Sri Lanka, as may be necessary for the exercise of the powers and the discharge of the functions of the Bank ;

(y) to acquire, hold, take or give on lease or hire, mortgage, pledge, sell or otherwise dispose of, any movable or immovable property ;

(z) to appoint a General Manager who shall be the chief executive officer of the Bank ; and to appoint such other officers and servants as may be necessary for the discharge of the functions of the Bank ;

(aa) to establish, a provident fund, and provide welfare and recreational facilities, houses, hostels and other like accommodation for officers and servants employed by the Bank;

(bb) to make rules in relation to its officers and servants, including their appointment, promotion, remuneration, disciplinary control, conduct and the grant of leave to them ;

(cc) to make rules in respect of the administration of the affairs of the Bank; and

(dd) to do all other things which, in the opinion of the Board are necessary to facilitate the proper discharge of the functions of the Bank.

(1) The authorized capital of the Bank shall be two thousand million rupees divided into twenty million shares of one hundred rupees each.

(2) The initial issued capital of the Bank shall be five hundred million rupees divided into live million shares of one hundred rupees each.

(3) The Bank may subject to subsection (1) from time to time, raise such sums of money as further contributions to the capital of the Bank, with the approval of the Monetary Board.

(1) The Monetary Board shall invite and receive applications for the initial issue of shares of the Bank and shall on receipt of such applications, allot shares to the Monetary Board, financial institutions and any public corporation or statutory institution in the following proportions :

(2) No allotment or transfer of shares of the Bank after the initial issue of shares, shall be made by the Bank except with the written approval of the Monetary Board.

(3) In granting approval for an allotment or transfer of shares under subsection (2), the Monetary Board shall subject to the provisions of subsection (4), endeavour to ensure that the proportions referred to in subsection (1) are maintained in the shareholding of the Bank.

(4) The Monetary Board may, after a period of two years from the appointed date offer its shares to the public in such manner as may be determined by the Monetary Board.

(1) All sums of money received by the Bank

shall be credited to the funds of the Bank.

(2) The financial commitments or liabilities of the Bank arising from or incurred in connection with

shall be charged on the funds of the Bank.

(1) The Bank shall establish a Gem Reserve for the purpose of

(2) The Bank may, with the prior approval of the Monetary Board

(3) The Board may make rules with the approval of the Monetary Board as regards the management and the administration of the Gem Reserve.

(1) The Bank may establish and maintain a Gem Reserve Fund (hereinafter referred to as the “Reserve Fund”).

(2) There shall be paid into the Reserve Fund

(3) There shall be paid out of the Fund

(4)

(1) The Board shall, every three years, appoint such number of fit and proper persons as it may deem fit to constitute a panel of valuers.

(2) The duty of each members of such panel shall be to

and submit reports in respect of such gems and jewellery to the Board when required to do so.

(3) A member of the panel of valuers shall, unless he dies or is removed from, or resigns from the panel, earlier, remain as a member of the panel for a period of three years from the date of his appointment.

(4) Rules may be made by the Board governing

(1) The Auditor-General shall audit the accounts of the Bank at such intervals not exceeding a period of twelve months as the Board may determine.

(2) The Auditor-General may appoint a qualified auditor or auditors to audit the accounts of the Bank and shall inform such auditor or auditors that he proposes to utilize his or their services for the performance and discharge of the Auditor-General’s duties and functions in relation to the Bank and thereupon such auditor or auditors shall act under the direction and control of the Auditor-General.

(3) Every qualified auditor appointed under the provisions of subsection (2) shall submit a report to the Auditor- General.

(4) The auditor shall examine the accounts of the Bank and ascertain the correctness of the balance sheet and any other accounts and report to the Board

(5) For the purpose of ascertaining the correctness of the balance sheet and any other account the Auditor-General may, with the sanction of the Board accept in respect of any branch of the Bank, any copies or abstracts from the books of accounts of such branch which have been transmitted to the head office of the Bank and which have been certified to be correct by the officer of the Bank authorized in that behalf by the Board.

(6) In this section “qualified auditor” means

(1) The Board shall on receipt of the Auditor-General’s report in respect of any year, cause a copy of each of the following documents relating to that year to be transmitted to the Minister and all the shareholders:

(2) The Minister shall lay copies of the documents transmitted to him under subsection (1) before Parliament.

(a) when required to do so by a court of law or by any person or body of persons to whom such matters relate; and

(b) in order to comply with any of the provisions of this Act.

(1) No suit or prosecution shall lie against any , director, officer, servant or agent of the Bank for any act which in good faith is done or purported do be done, by him under this Act, or on the direction of the Board.

(2) Any expenses incurred by the Bank in any suit or prosecution brought by or against the Bank before any court shall be paid out of the funds of the Bank and any costs paid to, or recovered by, the Bank in any such suit or prosecution shall be credited to the funds of the Bank.

(3) Any expenses incurred by any such person as is referred to in subsection (1) in any suit or prosecution brought against him before any court in respect of any act which is done or is purported to be done by him under this Act or on the direction of the Board shall, if the court holds that such act was done in good faith, be paid out of the funds of the Bank, to such person, unless such expense is recovered by him in such suit or prosecution.

(1) Notwithstanding anything in section 117 of the Monetary Law Act, the Monetary Board is hereby empowered to subscribe to the capital of the Bank, and to purchase, guarantee or accept as security, any share, promissory note or other security of the Bank.

(2) Every financial institution, public corporation and statutory institution shall be deemed to have the power to subscribe to the capital of the Bank, notwithstanding anything to the contrary in any law or instrument establishing such financial institution, public corporation or statutory institution.

(1) The Board may make rules, which are not inconsistent with the provisions of this Act in respect of all or any of the matters in respect of which rules are authorized or required by this Act to be made.

(2) No rule made by the Board under subsection (1) shall have effect until it has been approved by the Minister and approved by Parliament.

(1) Every person who

shall be guilty of an offence under this Act.

(2) Every person who commits an offence under this Act shall on conviction after trial before a Magistrate, be liable to a fine not exceeding one hundred thousand rupees or to imprisonment for a period not exceeding three years or to both such fine and imprisonment.

(3) Where an offence under this Act is committed by a body of persons, then

shall be deemed to be guilty of that offence:

Provided however that a director or an officer of such body corporate or partner of such firm shall not be deemed to be guilty of such offence if he proves that such offence was committed without his knowledge or that he used all such diligence to prevent the commission of such offence.

(4) The Board may, having regard to the circumstances in which an offence under subsection (1) was committed, compound such offence for a sum not exceeding fifty thousand rupees. All sums received by the Board in composition for an offence under this section shall be credited to the funds of the Bank.

(1) No person other than a director or a person expressly authorized by the Board, shall sign and execute any documents required to be signed or executed by the Board in the exercise, discharge or performance of any powers, functions or duties conferred or imposed on, or assigned to, the Bank under this Act.

(2) Receipts signed by a director or by any person expressly authorized by the Board to sign such receipts shall be an effectual discharge of the amounts paid to the Bank.

(a) a licensed commercial bank,

(b) a finance company,

(c) The National Savings Bank,

(d) The National Development Bank of Sri Lanka,

(e) State Mortgage and Investment Bank,

(f) Development Finance Corporation of Ceylon ;

(a) mining for gems or gemming;

(b) importing gems into, or exporting gems from, Sri Lanka;

(c) selling, purchasing, or supplying gems;

(d) valuing gems;

(e) cutting, polishing, engraving or carving of gems;

(f) heat treatment of gems and any other method of enhancing the value of gems ;

(g) examination and certification of gems and assaying of precious metals; and

(h) lapidary training ;