In Sri Lankan context most of the financial requirements of the economy are fulfilled by the banking sector. Government banks plays major role of it by providing financial requirements to large scale organizations to the retail customers. Due the economic recession starts in early 2022 banks find it difficult to find out their liquidity requirements. The main reasons for it were increase treasury bill rates, withdraw existing deposits to invest in treasury bills, increase interest rates, non-repayments of large-scale loans and non-availability of new loans due to the economic recession. Liquidity improvement is the major issue faced by the banks and to accede it better to reduce cash outflows, increase cash inflows and maintain performance under current level will helps to improve their liquidity in future. According to the above issue faced by the banks the researcher analyzed secondary data and find out the relationship between Liquidity Ratio as dependent variable, economic crisis as dummy variable to relate the crisis to the liquidity and LCR, NSFR and NPA Ratio as control variables. Thereafter the researcher identified that LCR and NSFR has the direct impact with the liquidity ratio by data analyzing based on the Fixed model using the EViews Software.
