The Central Bank (CB), in a bid to stem a sudden increase in motor vehicle imports owing to favourable currency depreciations, on Friday imposed new margin levels on opening Letters of Credit for such imports “The Monetary Board at its meeting held on 27th August decided to impose a 100 per cent margin deposit requirement [...]

The Sundaytimes Sri Lanka

Central Bank moves to reduce motor vehicle imports

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The Central Bank (CB), in a bid to stem a sudden increase in motor vehicle imports owing to favourable currency depreciations, on Friday imposed new margin levels on opening Letters of Credit for such imports

“The Monetary Board at its meeting held on 27th August decided to impose a 100 per cent margin deposit requirement against the Letters of Credit opened with the commercial banks for the import of motor vehicles, other than buses, ambulances, lorries and trucks. Accordingly, Letters of Credit for the importation of specified vehicle categories could be done only with a minimum cash margin of 100 per cent, with immediate effect,” the CB statement said.

The banking regulator noted that during the year the currencies of several trading partner economies have sharply depreciated against the Sri Lankan rupee. “As a consequence, there has been a growing possibility that the importation of motor vehicles into Sri Lanka could accelerate in the period ahead. The Central Bank believes that this trend should not be allowed to continue without a suitable response,” it said adding that the new rule will be reviewed after six months.

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