The director of the Department of foreign exchange of the Central Bank of Sri Lanka has issued guidelines to the banks on the outward remittances of foreign exchange as per the order issued by the Minister of Finance limiting such remittances. The attached documents are self-explanatory.

 We wish to inform you that the Minister of Finance has signed a new Order to be issued under Section 22 of the Foreign Exchange Act No. 12 of 2017 (FEA) with the approval of the Cabinet of Ministers, which is to be published in the Gazette No. 2338/40 dated 28.06.2023, with effect from 28.06.2023.  A summary of the transactions of the aforesaid Order is provided in the Annexure. The copy of the aforesaid Gazette will be published in the department’s website in due time.

 Accordingly, we request you to bring the contents of this email to the attention of all officers of your bank who are engaged in foreign exchange transactions, with immediate effect.

 

Thank you.

 

Dr. B H P K Thilakaweera

Director – Department of Foreign Exchange

Central Bank of Sri Lanka…

Transactions to be suspended/limit by the Order to be issued

  1. Limit the eligible migration allowance for the emigrants who are claiming the migration allowance for the first time under the general permission granted in Part I of the Schedule of the Regulations No. 3 of 2021 published in the Extraordinary Gazette Notifications No.2213/36 dated 03 February 2021 (hereinafter referred to as “Regulations No. 3 of 2021”), up to a maximum of USD 50,000 or equivalent in any other designated foreign currency, during the effective period of this Order;
  2. Limit the repatriation of funds under the migration allowance through Capital Transactions Rupee Accounts by the emigrants who have already claimed migration allowance under thegeneral permission stated in Regulations No. 3 of 2021, by the date of this Order, up to a maximum of USD 20,000 or equivalent in any other designated foreign currency, during the effective period of this Order;

iii. Limit the outward remittances or issuance of foreign exchange for any Sri Lankan individual who resides in or outside Sri Lanka and has obtained a Temporary Residence Visa of another country, up to a maximum of USD 20,000 or equivalent in any other designated foreign currency per person, under the general permission granted in Regulations No. 3 of 2021.

  1. Limit the issuance of foreign exchange for any person resident in Sri Lanka who intends to leave Sri Lanka under the Temporary Residence Visa of another country up to a maximum of USD 10,000 or equivalent in any other designated foreign currency per person, under the general permission granted in the Schedule of the Regulations No. 4 of 2021 published in the Extraordinary Gazette Notifications No. 2213/37 dated 03 February 2021.
  2. Suspend making payments through Outward Investment Accounts for the purpose of making investments overseas by person resident in Sri Lanka under the general permission granted in the Schedule of the Regulations No. 1 of 2021 published in the Extraordinary Gazette Notifications No. 2213/34 dated 03 February 2021, (hereinafter referred to as “Regulations No. 1 of 2021”) excluding:

(a) investments to be financed out of a foreign currency loan obtained by the investor from a person resident outside Sri Lanka under the provisions of the Act, or

(b) an additional investment to be made to fulfill the regulatory requirements in the investee’s country applicable on the investment already made in compliance with the provisions of the Act or repealed Exchange Control Act, in a company or a branch office in that country, or

(c) an additional investment/infusion of funds (as applicable) to be made by eligible resident companies in already established subsidiaries or branch offices overseas incorporated/registered subject to the provisions of the Act or repealed Exchange Control Act, up to a maximum of USD 30,000 or equivalent in any other designated foreign currency, for the purpose of working capital requirements of the investee,

or

(d) remittances for the purpose of maintenance of liaison, marketing, agency, project, representative or any other similar offices already established overseas subject to the provisions of the Act or repealed Exchange Control Act, by eligible resident companies, up to a maximum of USD 30,000 or equivalent in any other designated foreign currency, or

(e) investments by following eligible investors in the ordinary shares of a company outside Sri Lanka, for the purpose of expanding their core business overseas:

  1. Companies listed in the Colombo Stock Exchange (CSE) – up to a limit of

USD 200,000 or equivalent in any other designated foreign currency, or

  1. Companies that are not listed in CSE – up to a limit of USD 100,000 or

equivalent in any other designated foreign currency.

  1. f) investments by companies incorporated in Sri Lanka to set up overseas offices, up to a limit of USD 100,000 or equivalent in any other designated foreign currency; provided that, the Head of the Department of Foreign Exchange of Central Bank of Sri Lanka is satisfied with the fulfilment of such requirement.
  2. Limit the outward remittances on capital transactions through Business Foreign Currency Accounts held by a person resident in Sri Lanka, for the purpose of expanding their core business overseas, up to a maximum of USD 100,000 or equivalent in any other designated foreign currency, during the effective period of this Order;

vii. Limit the outward remittances on capital transactions through Personal Foreign Currency Accounts held by a person resident in Sri Lanka, up to a maximum of USD 20,000 or equivalent in any other designated foreign currency, during the effective period of this Order;

viii. The Monetary Board shall have the authority to grant permission on a case-by-case basis, in terms of Section 7(10) of the Act, for investments which exceed the limits specified in the general permission granted in Regulation No. 1 of 2021 provided that,

(a) the proposed investment is to be financed out of a foreign currency loan obtained by the investor from a person resident outside Sri Lanka under the provisions of the act, or

(b) the proposed investment is to be made to fulfill the regulatory requirement in the investee’s country applicable on the investment already made in a company or branch office in that country in compliance with the provisions of the Act or repealed Exchange Control Act.

  1. For the purpose of this Order “core business” means a business activity of a company which can be considered as the main source of the company’s revenue, as confirmed by the auditor of the company.
  2. This Order is valid for a period of six months from the date of this Order. The Order published in the Extraordinary Gazette Notifications Nos. 2286/27 dated 30 June 2022 and 2311/38 dated 22 December 2022 are hereby rescinded (SW)