The Central Bank of Sri Lanka (CBSL) has removed the interest rate caps imposed on foreign currency deposit products of licensed commercial banks and the National Savings Bank following its decision to float the currency.
“Considering the recent monetary policy tightening measures, the expected macroeconomic developments and the prevailing interest rates on foreign currency deposits of licensed banks, the Monetary Board hereby issues an amendment to the Monetary Law Act Order No. 03 of 2021 on Maximum Interest Rate on Foreign Currency Deposits of Licensed Commercial Banks and the National Savings Bank, removing the existing maximum interest rate limits imposed on foreign currency deposits of licensed commercial banks and the National Savings Bank,” the CBSL announced on Friday.
Earlier this week, the CBSL decided to float the Rupee exchange rate with Banks confronted with foreign currency shortages leading to a shortage of imported essentials, while also resulting in a sharp drop in Worker Remittance inflows.
The CBSL in August last year ordered a 5% annual interest rate cap on all foreign currency deposit products (except for Special Deposit Accounts) of licensed Banks, which was amended at the end of the year.