The IBSL was established in 1964 as the Bankers' Training Institute (BTI Ceylon) by the Central Bank of Sri Lanka and incorporated in 1979 by the Act No. 26 of 1979 of Parliament, as the Institute of Bankers of Sri Lanka (Incorporation).
To provide instruction and training for employees of banking institutions and 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;
To conduct examinations and to issue certificates to those who are successful in such examinations;
To facilitate and encourage discussions on matters of interest to bankers; and
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.