Central Bank relaxes forex regulations

Thursday, 29 May 2014 00:00 - - {{hitsCtrl.values.hits}}

The Central Bank yesterday further relaxed foreign exchange regulations, aiming to improve competitiveness in the global market. Improved macroeconomic environment, greater stability in the external sector as well as the development of a more effective and comprehensive regulatory and surveillance framework were cited by the Central Bank as reasons for several exchange control regulations to have been liberalised over the past few years. “In keeping with the above policy trend, a series of further relaxation measures as follows, will be implemented with effect from 28 May. Such measures are also expected to further enhance the external competitiveness of Sri Lanka in the global market,” the statement added. Under the new measures, permission has been granted to foreign investors to invest in debentures of companies incorporated in Sri Lanka. Foreign investors will be allowed to invest in non-listed debentures, in addition to listed debentures, through the Securities Investment Account (SIA). It also allows widening the eligibility to obtain an Electronic Fund Transfer Card (EFTC). Holders of migrant blocked accounts, SIA, diplomatic accounts, etc. will be allowed to obtain debit cards. In the issuance of foreign travel cards, a general permission will be granted to Licensed Commercial Banks (LCBs) to issue travel cards to their customers. There will also be increased facilities to resident foreign exchange earners. Foreign Exchange Earners’ Account (FEEA) holders will be allowed to make payments relating to foreign contracts out of the existing funds in the FEEA. LCBs will be allowed to provide loans in foreign currency to FEEA holders. In addition, several amendments that have been made on a piece meal basis from 2012 onwards, will be consolidated. The current requirement of maintaining a minimum balance in Special Foreign Investment Deposit Account (SFIDA) accounts will be removed. Remittance of living expenses in advance to obtain student visas has also been provided. A general permission will be granted for LCBs to facilitate transactions of students to open accounts with a foreign bank, if such students intend to proceed outside Sri Lanka for their studies. Such payments also could be remitted through a resident foreign currency account, a resident non national foreign currency account, or a foreign currency account for international services providers and their employees. In relation to credit facilities to importers resident in Sri Lanka by suppliers resident outside Sri Lanka, the time restriction that was prevalent on supplier’s credit for importers will be removed. For Letters of Credit the prevailing restriction on extending a Letter of Credit will be removed.

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