Regulatory Alerts2020-04-24 | Finance Business Act Directions No. 4 of 2020Added · Updated
Amendments to the Maximum Interest Rates on Deposits and Debt Instruments
The Monetary Board of the Central Bank of Sri Lanka replaces previous directions with new maximum interest rates for Licensed Finance Companies (LFCs) on Sri Lanka Rupee deposits and debt instruments. For LKR deposits, rates are capped based on the Savings Deposit Fixed Rate (SDFR) or Treasury bill (T-bill) rates plus specified margins ranging from 0.25% to 3.75% depending on tenure. Debt instruments are subject to similar caps, with rates set at the T-bill rate plus margins between 0.50% and 4.25%. The Finance Business Act Directions No. 03 of 2019 are withdrawn with effect from the date of this direction.
MONETARY BOARD CENTRAL BANK OF SRI LANKA 24 April 2020 FINANCE BUSINESS ACT DIRECTIONS No. 4 of 2020 AMENDMENTS TO THE MAXIMUM INTEREST RATES ON DEPOSITS AND DEBT INSTRUMENTS
Issued under Section 12 of the Finance Business Act, No. 42 of 2011
The Monetary Board hereby issues Direction on maximum interest rates to be paid in respect of deposits and debt instruments of Licensed Finance Companies (LFCs).
- The following will replace Direction 1.1.(i) and Direction 1.2 of the Finance Business Act Direction No.01 of 2019 on Maximum Interest Rates on Deposits and Debt Instruments of LFCs.
1.1. The maximum interest rates that may be offered or paid by an LFC on Sri Lanka Rupee (LKR) deposits shall;
(i) Not exceed the interest rates derived in accordance with Table 01 below;
Table 01 Maximum Interest Rates at Maturity for deposits of LFCs
| Tenure of Deposit | Maximum Interest Rate Per annum |
|---|---|
| Savings and other deposits of a tenure of less than 01 month or maturity is not specified | SDFR |
| Term Deposits | |
| 01 month and less than 03 months | T-bill rate |
| 03 months and less than 06 months | T-bill rate + 0.25% |
| 06 months and less than 01 year | T-bill rate + 0.50% |
| 01 year and less than 02 years | T-bill rate + 2.00% |
| 02 years and less than 03 years | T-bill rate + 2.75% |
| 03 years and less than 05 years | T-bill rate + 3.25% |
| 05 years | T-bill rate + 3.75% |
1.2. The maximum interest rates that may be offered or paid by an LFC on debt instruments shall not exceed the rates derived in accordance with Table 02 below;
Table 02 Maximum Interest Rates at Maturity for debt instruments of LFCs
| Tenure of debt instruments | Maximum Interest Rate |
|---|---|
| Less than 01 year | T-bill rate + 0.50% |
| 01 year and less than 02 years | T-bill rate + 2.75% |
| 02 years and less than 03 years | T-bill rate + 3.25% |
| 03 years and less than 05 years | T-bill rate + 3.75% |
| 05 years | T-bill rate + 4.25% |
- The Finance Business Act Directions No. 03 of 2019 – Amendments to the Maximum Interest Rates on Deposits and Debt Instruments dated 18.10.2019 is withdrawn with effect from the date of this direction.
Prof. W D Lakshman Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka
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