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Wednesday, 14 December 2011

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Government Gazette

CBSL relaxes foreign investment regulations

The Central Bank of Sri Lanka (CBSL) has, with immediate effect, relaxed the regulations in relation to foreign investments in corporate debentures of local firms and foreign borrowings.

In the case of corporate debentures raised by local companies, the ceiling imposed on the interest rate of the debentures has been removed and the requirement for the maintenance of a sinking fund by the issuing company has been removed. The minimum tenor of the debentures has been reduced from the current level of five years to two years.

In the case of foreign borrowing the current limit on borrowing applicable to a local firm has been increased from US $ 20 million to US $ 50 million and local firms have been permitted to raise foreign loans against corporate or bank guarantees.

Other borrowing arrangements of a short-term nature and those by newly incorporated firms would also be considered for approval by the CBSL, based on the merits of each case. These new procedures are expected to support the currently expanding economic activities which require alternative financing sources at a competitive cost.

The guidelines on approval and the relevant application for foreign borrowings could be downloaded from the website of the Central Bank of Sri Lanka. www.cbsl.gov.lk. The necessary gazette notification regarding foreign investments in corporate debentures will be issued shortly.

 

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