The Central Bank of Sri Lanka (CBSL) today issued a clarification on misrepresentations of facts’ with regard to the usage of the Indian Rupee (INR). within Sri Lanka
In a release, the CBSL emphasised that the authorization of the Indian Rupee as a designated currency does not make it legal tender’ in Sri Lanka for domestic payments and settlements.
“Any transaction executed between or among residents in Sri Lanka shall be in LKR, being the legal tender in Sri Lanka.”
The CBSL said that the main purpose of authorising foreign currencies as designated currencies is to promote trade and investment relations between the two countries.
Further, it is expected to reduce the additional transaction costs associated with dual conversion and promote trade transactions through the formal banking channel.
The CBSL noted that the legal tender in Sri Lanka for domestic payments and settlements will remain LKR.
The statement added that trade between Sri Lanka and India has grown rapidly since the Indo-Sri Lanka Free Trade Agreement (FTA), which came into force in March 2000.
In view of the expanding economic activities between India and Sri Lanka, particularly in promoting existing trade relations between the two countries, on several occasions the CBSL has communicated to the Reserve Bank of India (RBI), the Monetary Authority of India, its willingness to authorise INR as a designated foreign currency in Sri Lanka.
