"This should have happened long ago, but I am happy with the way the ICC handled the Pakistani complaint," said Ranatunga, who led his team to an epic World Cup triumph in 1996.
Ranatunga said Hair had a prejudice against Asian teams.
Hair had no-balled Sri Lankan spin wizard Muttiah Muralitharan seven times during the 1995 Boxing Day Test in Melbourne, when Ranatunga led the side.
Sri Lanka had then complained that Hair's action was part of an Australian campaign to undermine a resurgent team and the Aussie was not assigned to officiate any match featuring Sri Lanka for a long time.
The ICC's decision on Saturday came after Pakistan lodged a complaint against him for his role in the forfeited Oval Test against England in August and demanded an inquiry into his conduct.