Sri Lanka introduces new operational measures for forex transactions

Sri Lanka today introduced a single foreign currency account thus unifying several existing foreign currency accounts maintained by foreign exchange earners.

Accordingly, the new account which is named as’ Foreign Exchange Earners Account’ will replace a multiple of foreign currency accounts currently existing in the banking system.

The new account will help replace accounts such as Exporters Foreign Currency Account, Indirect Exporters Foreign Currency Account, Foreign Currency Account for Suppliers of Inputs; Foreign Currency Account for Professional Services Providers and Non Resident Foreign Currency Accounts for Foreign Employment Agencies.

It will also help replace the Foreign Currency Account for Gem and Jewellery dealers and also the temporary/ special foreign currency accounts authorized by the Controller of Exchange.

Exporters, indirect exporters, suppliers of inputs, professional services providers, entrepot traders, gem and jewellery dealers, insurers, insurance brokers, travel agents, hoteliers, bunker suppliers and other residents who undertake foreign projects would be permitted to execute their international transactions through this new FEEA.

Sri Lanka has also introduced new operational measures for transactions between Non-Resident Foreign Currency (NRFC) and Resident Foreign Currency (RFC) Accounts.

Accordingly, the Bank will permit certain transactions in relation to NRFC and RFC accounts held in the same bank or different banks irrespective of the holder of account or currency type in which accounts are maintained.

Among those permitted transactions ranks, permission to make fund transfers between NRFC accounts, fund transfers between RFC accounts and fund transfers from NRFC accounts to RFC accounts.

However, the Bank says, funds/proceeds realized from the sale of properties in Sri Lanka should be credited to NRFC/RFC accounts, only in keeping with the existing regulations.