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Banks instructed to offer extra Rs.10 for hard foreign currency conversions

22 December 2021 10:08 am - 12     - {{hitsCtrl.values.hits}}

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  • Fresh instructions appear to carry broad based effect, going beyond remittances 
  • CBSL earlier asked banks to give Rs.10 extra for worker remittances during December    
  • New incentive scheme ranges from foreign currency conversions to deposits to FX investments made using hard currency
  • Banks asked to sell 20% of such foreign currency back to the Central Bank on weekly basis   
  • But instructions appeared to have caused some confusion

Licensed banks have been asked to offer extra Rs.10 for foreign currency notes “held in hand”, as part of a broader incentive package offered to encourage the general public to channel all their foreign currency through the formal banking system.


As the latest attempt to draw foreign currency notes lying outside the banking system, the Central Bank issued fresh instructions roughly a fortnight ago to all licensed banks outlining the newest incentive scheme applicable from December 13 to 31. 


At the start of the month, the Central Bank announced an additional incentive of Rs.8.00 in addition to the Rs.2.00 already in place when converting worker remittances during December, to woo back such incomes lost lately to informal money changers. Sri Lanka lost 50 percent of foreign remittances each during October and November due to parallel exchange rates, which offered much higher rates than the official rate of Rs.200 starting June this year. Meanwhile, the new incentive schemes will offer Rs.210 for each dollar or equivalent of any other foreign currency when converting and depositing in a rupee account by the general public. 


General public who may have any remaining foreign currency notes at hand after returning from abroad could now walk into any licensed bank to convert or deposit such foreign currency in a rupee deposit account at a conversion value of Rs.210 per US$, up to US$ 15,000 or equivalent in any other foreign currency. 


This incentive will also apply to those who earn in foreign currency from employment, professional service or business while working abroad and brought into Sri Lanka, and those foreign currency acquired and brought into Sri Lanka after January 1, 2020 with the intention of depositing in the Special Deposit Account (SDA) introduced last year.    


Further, the general public is also permitted to deposit such foreign currency notes into their Personal Foreign Currency Account or SDA. 
Such foreign currency notes are also allowed to be invested in Sri Lanka Development Bonds.


However, banks are required to sell back 20 percent of such foreign currency converted during the period of the incentive scheme in force to the Central Bank. 
Banks were earlier required to sell 10 percent of worker remittances and 20 percent of export proceed conversions back to the Central Bank.  

Meanwhile, reflecting an element of confusion caused by the instructions on worker remittance conversions, some remittance recipients were turned down by their banks to offer Rs.210 for remittances made via online transfers and others have been declined altogether citing that no proper instructions had been received. 


One leading private bank had told a migrant worker in a correspondence that the additional Rs.10.00 would be, “applicable at the time of converting/exchanging foreign currency notes (hard currency) only”, and, “would not be applicable for fund transfers converting to LKR”. 


Nevertheless, there are banks, which offer the additional Rs.10.00 for worker remittances regardless of the medium of transfer, provided the recipient could show proof that money had been received from foreign employment. 

 


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  Comments - 12

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  • roni Wednesday, 22 December 2021 11:18 AM

    Public are not that stupid to go to a licensed commercial bank and pay 1% commission to change Foreign currency, when the money changer despite all these regulations offer more and without any deductions.

    BabaBoo Wednesday, 22 December 2021 11:28 AM

    All nonsense. Float the rupee. How can an account manage and economy. An economy needs to be steered by economist. Ever heard of how and why the Apple founder Jobs was fired from his job by the same company he created.

    Tikiri Mole Wednesday, 22 December 2021 12:18 PM

    Keep USD @ 200/- and give extra 50 rupees for all dollars deposit in banks. Problem solved

    Premalal Perera Wednesday, 22 December 2021 01:00 PM

    Why do hardworking people have to pay for government corruption?

    nihal Wednesday, 22 December 2021 01:15 PM

    Katta Kabbage boru weda..pada show.. he should be in jail.

    Mithun Wednesday, 22 December 2021 02:57 PM

    This government has nothing remain to loose from peoples' popularity. So keeping dollar at 200 and doing this nonsense won't work. Let the dollar to float and we will see a one more price hike as yesterday with the fuel price hike but at least Country will get foreign remittances in legal channels to manage the crisis.

    Fernando G Wednesday, 22 December 2021 07:16 PM

    Yes. Exactly. In the current situation Nandasena saves face a little bit but the financial situation gets more dire by the minute.

    Joshua Wednesday, 22 December 2021 04:14 PM

    Cabraal's policies are good for nothing

    Eri Claud Wednesday, 22 December 2021 04:18 PM

    People are not stupid like Cabraal. Middle East workers won't send money from bank to bank. Cabraal can dream.

    Dasa Dahanayaka Wednesday, 22 December 2021 04:51 PM

    I just converted USDs at Rs 240 on Monday in Pettah. Don’t be a fool by listening to this rubbish from the central bank.

    roni Wednesday, 22 December 2021 07:45 PM

    What rubbish is this the effective rate to the USD is now approx SLR212 officially when this SLR10 is added but Caba is showing that is below that wonder what rate the customs use for taxes if it is SLR202 then further revenue is lost because of this accounting technician.

    vithura Wednesday, 22 December 2021 08:25 PM

    Such a clown running the CB, why does not the government realise that the Rupee is over valued as it stands. Try making it convertible and you will soon wake up to the reality


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