The Central Bank yesterday issued a slew of revised forex regulations, including introducing new accounts for forex borrowings and repatriating emigrant incomes as well as allowing exemptions for Inward Investment Accounts (IIAs) and unveiling three new resident investor categories. Issuing a statement, the monetary authority said regulations issued under the Foreign Exchange Act, No. 12 of 2017 (FEA) had been revised for further simplification and clarity improvement.
The new measures have been made with the objectives of achieving greater efficiency in the conduct of cross-border foreign exchange transactions alongside further facilitating economic activities of the stakeholders through greater convenience of doing business.
These revised foreign exchange policy framework as highlighted above has been implemented with effect from 22 March. Inter-alia, key highlights of policy measures so introduced, are as follows.
i. Excluding the mandatory requirement of opening Inward Investment Accounts (IIAs) by the foreign investors/lenders when granting loans to persons resident in Sri Lanka including to Government and State-owned enterprises.
ii. Introducing a new account titled ‘External Commercial Borrowing Account’ to facilitate foreign exchange borrowings from overseas by persons resident in Sri Lanka.
iii. General permission for companies registered in Sri Lanka (branch office, liaison office, project office, etc.) to borrow from their parent companies outside Sri Lanka.
iv. General permission for non-resident investors to invest in shares or debt securities of companies not incorporated in Sri Lanka and listed in Colombo Stock Exchange by routing funds through accounts maintained in the Offshore Banking Units of Licensed Commercial Banks in Sri Lanka instead of routing funds via IIA.
v. Introducing a supplementary account titled ‘Emigrant’s Remittable Income Account’ for the purpose of repatriating emigrant’s current income.
vi. Permitting emigrants to invest in Sri Lanka out of the funds held in Non-Resident Rupee Accounts and Capital Transaction Rupee Accounts.
vii. General permission for persons resident in Sri Lanka who has been a resident outside Sri Lanka and earned/obtained foreign exchange outside Sri Lanka and companies incorporated in Sri Lanka which are eligible to borrow from overseas to open, maintain and operate an account with a regulated financial institution outside Sri Lanka.
viii. General permission for Sri Lankans employed outside Sri Lanka (other than emigrants) to open and maintain rupee accounts for crediting funds generated in rupees and for local disbursements.
ix. Introducing three new eligible resident investor categories as to, listed entities or non-listed entities, which have been established under any other written laws in Sri Lanka and sole proprietorships.
x. Permitting deposit of unutilised foreign currency obtained as travel allowance into new or existing Personal Foreign Currency Accounts.
For further information, refer Gazette Extraordinary Nos. 2213/34 -39 dated 3 February, visit www.dfe.lk or contact the Department of Foreign Exchange on 2477255/433/207/375.
(FT)