Sri Lankan central bank relaxes regulations

December 13th, 2011 - 2:13 pm ICT by IANS  

Colombo, Dec 13 (IANS) Aiming to spur economic growth, the Sri Lankan central bank has relaxed regulations of foreign investments in corporate debentures of local firms and foreign borrowings by local firms, it said in a statement Tuesday.

In the case of corporate debentures raised by local companies, the ceiling imposed on the interest rate of the debentures has been removed as have the requirement for the maintenance of a sinking fund by the issuing company, according to the statement.

These new procedures are expected to support alternative financing needs at a competitive cost. In addition, the minimum tenure of the debentures has been reduced from the current level of five years to two years, reported Xinhua.

In the case of foreign borrowing, the current limit on borrowing applicable to a local firm has been increased from $20 million to $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 central bank, based on the merits of each case,” said the statement.

Sri Lanka’s economy is projected to grow at a steady 8 percent in 2012, helped by a post-war tourism boom and heavy government infrastructure investment.

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