Regulatory Alerts2019-10-18 | Finance Business Act Direction No. 3 of 2019Added · Updated
Amendments to the Maximum Interest Rates on Deposits and Debt Instruments
The Monetary Board of the Central Bank of Sri Lanka issued Direction No. 03 of 2019 under the Finance Business Act to update maximum interest rates for Licensed Finance Companies. The directive replaces previous regulations by establishing new caps for Sri Lanka Rupee deposits and debt instruments based on specific tenures relative to the Treasury Bill rate and the Short-Term Deposit Facility Rate. These standardized rates apply to various maturity periods ranging from less than one month to five years for both deposit and debt instrument categories.
MONETARY BOARD
CENTRAL BANK OF SRI LANKA
18 October 2019 FINANCE BUSINESS ACT DIRECTIONS No. 03 of 2019
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 + 0.50% |
| 03 months and less than 06 months | T-bill rate + 1.00% |
| 06 months and less than 01 year | T-bill rate + 1.50% |
| 01 year and less than 02 years | T-bill rate + 3.25% |
| 02 years and less than 03 years | T-bill rate + 4.00% |
| 03 years and less than 05 years | T-bill rate + 4.50% |
| 05 years | T-bill rate + 5.00% |
MONETARY BOARD
CENTRAL BANK OF SRI LANKA
18 October 2019 FINANCE BUSINESS ACT DIRECTIONS No. 03 of 2019
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 + 1.50% |
| 01 year and less than 02 years | T-bill rate + 3.25% |
| 02 years and less than 03 years | T-bill rate + 4.00% |
| 03 years and less than 05 years | T-bill rate + 5.00% |
| 05 years | T-bill rate + 5.50% |
S R Attygalle
Actg. Senior Deputy Governor / Chief Executive Officer
of the Central Bank of Sri Lanka
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