The IBSL was first established in 1964 in the name of Bankers' Training Institute (Ceylon) by the Central Bank of Sri Lanka and re-incorporated in 1979 by an Act of Parliament, Institute of Bankers of Sri Lanka (Incorporation) Act No. 26 of 1979. The IBSL, as a professional body discharges four primary mandates according to the act.

1) To provide instruction and training for employees of banking institutions and employees of the Central Bank of Sri Lanka in the study of the theory and practice of banking and of related subjects and for such purpose to provide

all facilities including lectures, discussions and library facilities;

2) To conduct examinations and to issue certificates to those who are successful in such examinations;

3) To facilitate and encourage discussions on matters of interest to bankers; and

4) To take such measures as may be desirable to further the interest of banking.

The IBSL also received the approval of the Central Bank of Sri Lanka to include the word "Bankers, Banking and Finance" in corporate names of the IBSL.