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Central Bank further relaxes foreign exchange regulations

The Central Bank (CB) on Wednesday (17) announced the further relaxation of foreign exchange regulations, which will come into immediate effect. Last November, the CB revised exchange control regulations and introduced several measures aimed at boosting investment.

Among the new policy measures are – selected super markets could exchange foreign currency notes; Sri Lankan students studying overseas could borrow from foreign banks without prior approval and resident Sri Lankans could make payment to non-residents in respect of purchase of properties in Sri Lanka.

The Exchange Control Department will also allow foreign investors to invest in the domestic unit trusts and will permit the conversion of rupee salaries paid to foreign expatriates, into special Resident Non-National Foreign Currency Accounts (RNNFC), which was not permitted earlier.

“The Central Bank of Sri Lanka is of the view that the relaxation of these foreign exchange regulations would enhance investor confidence, strengthen the foreign reserves in the long run and stabilize the foreign exchange market, thereby paving the way to integrating the Sri Lankan economy more closely with the global economy”, the bank said in a statement issued on Wednesday (17).

Foreign nationals who are residing in Sri Lanka are presently permitted to open and maintain foreign currency accounts named ‘Resident non-National Foreign Currency Accounts (RNNFC)’. However, expatriate employees are currently not permitted to credit their earning received in Sri Lankan rupees, into such RNNFC accounts.

In order to facilitate foreign exchange transactions, it has now been decided to grant permission to convert the salaries and other benefits paid in Sri Lankan Rupees to expatriate employees, into foreign currency and credit such amounts to RNNFC accounts.

The Central Bank release also said that under current regulations, resident buyers of Sri Lankan real estate from Non-resident Sri Lankans are required to obtain the prior permission from the Controller of Exchange to make payments to Non-Residents. With a view to facilitate foreign exchange transactions, it has now been decided to grant permission under section 7 of Exchange Control Act, for Sri Lankan resident buyers to make payments to non-resident Sri Lankans in respect of purchase of real estate properties.

With regard to permitting supermarkets to engage in money changing business the CB said, “with the improvement of the tourism industry and increase migrant workers’ remittances, money changing business is expected to grow substantially in the coming years. At present, money changing businesses are mainly concentrated in the Colombo District and around the coastal belt in the Western Province.

“In order to provide additional flexibility to those who wish to change foreign currency through formal channels, it has now been decided to grant money changing licences to selected supermarket chains open till late night on all days, including holidays.”

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