- CB Governor denies such claims dismissing them as rumours spread by mischievous elements
- New rules intended at wooing more services income and remittances appear to be backfiring
- Some migrants say they would hold off repatriations beyond a bear minimum until the rules are scrapped
- CB instructions appear to have caused some confusion among banks and clients
A state of confusion appears to have been created by the instructions issued to banks by the Central Bank with regard to conversion of bank balances of resident Sri Lankans who earn in dollars and Lankan migrant workers who remit money to their foreign currency bank accounts.
Some claim that balances in their foreign currency accounts are being forcibly converted into Sri Lankan rupees by banks citing the new conversion rules are ordered by the Central Bank.
They say some banks have resorted to convert the balances in their foreign currency accounts upon seeking their consent, while others have done so without prior notice.
While the people who receive income in foreign currency expressed their dismay over this practice, some irate migrant workers have said they wouldn’t send back money hereafter except for a bear minimum, until the authorities scrap the new conversion rules.
Meanwhile the Central Bank Governor, Ajith Nivard Cabraal who took to Twitter to respond to such claims categorically denied them, calling them both, “rumours”, and “total false”.
“Rumors spread by some mischievous elements that Sri Lankan #banks have been ordered by @CBSL to forcibly convert balances in their customers’ #Forex accounts are totally false. #SriLanka #Fakenews,” he said yesterday.
The extraordinary gazette notification issued on October 28 titled ‘Repatriation of Export Proceeds into Sri Lanka’, covered the services receipts including, “professional/ vocational, occupational, and business services provided to persons resident outside Sri Lanka by persons resident in Sri Lanka”.
It also said the residual amounts of such services income receipts, after meeting several allowable expenses and commitments up to a month are subjected to conversion into Sri Lankan rupees on the 7th day of the following month.
However, “these rules do not apply to inward remittances (worker remittances) to the country by Sri Lankans working abroad,” an explanatory note issued by the Central Bank subsequent to the circular said.
Hence, it begs the question as to how some of the migrant workers, who repatriate their foreign currency earnings,were subjected to these conversion rules as claimed by them.
Further, “proceeds received by non-residents to the accounts maintained in the Offshore Banking Unit solely for collection purposes, where exports are not originating from Sri Lanka, are also not subject to these rules,” the gazette stated.
If instructions from customers were not received by the 7th day of next month for conversion, “banks are required to convert export proceeds by the due date in the absence of documentary evidence from the exporter.”
In December last year, the Bar Association of Sri Lanka filed a writ petition at the Court of Appeal, challenging this rule which gives powers to convert professional fees received in foreign currency.