Sri Lanka Central Bank relaxes regulations on foreign investment

Dec 13, Colombo: Sri Lanka’s Central Bank said it had, with immediate effect, relaxed the regulations in relation to foreign investments in corporate debentures of local firms and foreign borrowings.

Under relaxed regulations the Central Bank has increased the borrowing limit for local firms to US$ 50 million from an earlier US$ 20 million and permitted the local firms to raise foreign loans against corporate or bank guarantees.

The Central Bank has removed the ceiling imposed on the interest rate of the debentures in the case of corporate debentures raised by local companies.

The Bank has also removed the requirement for the maintenance of a sinking fund by the issuing company and the minimum tenor of the debentures has been reduced from the current level of five years to two years.

“These new procedures are expected to support the currently expanding economic activities which require alternative financing sources at a competitive cost,” the Central Bank said in a statement issued Tuesday (13).

The Bank will also consider the approval of other borrowing arrangements of a short-term nature and those by newly incorporated firms, based on the merits of each case.

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