Central Bank relaxes foreign exchange regulations

During the past few years, Sri Lanka’s macro economic fundamentals have improved and the domestic financial sector has become stronger and more resilient.

In this background, foreign exchange regulations have been reviewed and relaxed gradually to achieve greater efficiency in international financial transactions and further facilitate economic activity of the private sector through greater ease of doing business thus enhancing the overall competitiveness of the economy.

In keeping with this policy framework, new relaxation measures were implemented from June 12. The highlights of these policy measures are:

To provide greater flexibility for people operating NRFC/RFC accounts. People are now permitted to open new NRFC/RFC account(s) using funds transferred from existing NRFC/RFC account(s) maintained with another authorised dealer, without first obtaining the permission of the Controller of Exchange. Holders of Foreign Exchange Earners Accounts (FEEA) are eligible to obtain foreign currency loans.

Earlier foreign currency loans could be obtained only by a limited category of foreign exchange earners, such as exporters and indirect exporters.

Henceforth, banks will be permitted to extend foreign currency loans to all categories of FEEA holders.

Permission to repatriate capital gains from the sale of residential properties by non-residents. To encourage investments in immovable property, non-residents will be permitted to repatriate capital and capital gains upon sale of immovable property owned and/or developed by the non-resident, provided the property had originally been acquired and/or developed by such owner through funds remitted into Sri Lanka through international banking channels.