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Central Bank to reduce forex in peoples’ hands

20 May 2022

  • Seeks approval from Finance Min. to reduce from $ 15,000 to $ 10,000
  • $ 10,000 also requires proof of how it is earned 
  • Hopes to add more dollars to banking system through decision
    By Imesh Ranasinghe  The Monetary Board of the Central Bank of Sri Lanka (CBSL) has agreed and requested approval from the Finance Ministry to reduce the limit on foreign exchange notes that an individual can hold from $ 15,000 to $ 10,000, to bring more dollars into the banking system. Speaking to reporters yesterday (19) at the monetary policy review, CBSL Governor Dr. Nandalal Weerasinghe said that under Section 8 of the Foreign Exchange Act No. 12 of 2017, there is currently a limit of $ 15,000 that a person or resident in Sri Lanka could hold in cash, up to a maximum of three months, provided that it has been received in a legal manner. Following the expiry of three months, the individual is bound to convert or deposit that money in a foreign currency account in a bank. Thus, he said, the Monetary Board has agreed to bring this limit to $ 10,000 and show proof of how that money is earned. Following the approval from the Finance Ministry, he said: “We are going to give a grace period of two weeks for them to deposit the money in their foreign currency accounts or convert that money from the banks.” Moreover, he said, after the grace period, the Foreign Exchange Act will give authority to the CBSL and law enforcement authorities to impose fines after seeking interpretations from the Attorney General on the fines. For example, he said if a person has $ 100,000 in cash in their possession after the grace period, the authorities could impose fines of up to $ 100,000 on them, which basically means the person will lose all the foreign currency in their possession. The Governor said that the intention of this decision is to get the foreign currency in circulation outside the banking system into the banking system, and use it to support essential imports to the country. Further, he said, it is the ideal time for people who have foreign currency in hand to convert it into rupees, as the dollar is depreciating at the moment. “If you convert and deposit that money in the bank, you will get an interest of up to about 20%,” he added. Also, he said: “We are giving a warning to the people that you have a choice, whether you go underground, or hide your foreign currency, it is like possessing something illegal. This will certainly discourage normal law-abiding citizens from openly engaging in this transaction.” Further, he said that If anyone goes underground with their money, that is up to that particular individual, but he added that there is a risk involved that this person might lose all of their holdings found by the authorities.


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