NRFC accounts transferable as CB relaxes forex rules
View(s):Sri Lanka’s Central Bank on Wednesday relaxed foreign exchange regulations allowing NRFC (foreign currency) account holders to transfer accounts to any other bank, increased the $2,500 travel allowance cap to $5000 and permitted finance companies to accept foreign currency deposits.
The relaxation, with immediate effect, follows policies enunciated earlier to allow free movement of foreign exchange.
The new policy measures are as follows:
(i) General permission to transfer funds in an NRFC/RFC account of one bank to another bank: In order to provide greater flexibility for persons operating NRFC/RFC accounts, individuals will now be permitted to open new NRFC/RFC account(s) utilizing funds transferred from existing NRFC/RFC account(s) maintained with another authorized dealer, without first obtaining the permission of the Controller.
(ii) Holders of Foreign Exchange Earners Accounts (FEEA) to be eligible to obtain foreign currency loans: Currently, foreign currency loans can be obtained only by a limited category of foreign exchange earners, such as exporters and indirect exporters.
(iii) General Permission to repatriate capital gains from the sale of residential properties by non-residents: Non-residents will henceforth be permitted to repatriate both capital and capital gains upon sale of immovable property owned and/or developed by the non-resident, provided the property had originally been acquired and/or developed by such owner through funds remitted into Sri Lanka through international banking channels.
(iv) Extension of migration allowance to each migrant of age 18 and above: Migrants aged 18 years and above, will be eligible for a maximum migration allowance of US$ 150,000 at the time of migration, and an annual allowance of $20,000 thereafter. Further, proceeds from current transactions, provident fund and gratuity benefits will also be freely repatriated in addition to the aforestated allowances.
(v) Permission for banks to open and maintain Nostro Accounts and invest Nostro balances abroad.
(vi) Increase in the amount of foreign currency notes that may be issued for travel purposes: The quantum of foreign currency notes that may be issued for travel purposes by an authorized dealer will henceforth be increased from the current level of $2,500 to $5,000.
(vii) Permit non-bank financial institutions to accept foreign currency deposits: Licensed Finance Companies (LFCs) which are rated at a credit rating of A- or above by Central Bank specified credit rating agencies, will be permitted on application, to open and maintain foreign currency deposit accounts for their customers.
(viii) Repatriation of Pre-SIERA (Share Investment External Rupee Account) Foreign Investments in Sri Lanka: The Central Bank has now established a mechanism to grant permission on a case-by-case basis for the repatriation of dividends and sale or maturity proceeds of investments made by foreign investors in shares and business ventures in Sri Lanka, prior to the introduction of the SIERA in 1990.
(ix) Opening and maintaining of bank accounts abroad by dual citizens: As per the new rules, Sri Lankan dual citizens or Sri Lankan holders of permanent residency permits issued by foreign Governments will henceforth be permitted to maintain bank accounts outside Sri Lanka, without obtaining prior permission from the Exchange Control Department.
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