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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