Regulatory Alerts2017-12-12 | Banking Act Directions No. 7 of 2017Foreign Currency Borrowings by Licensed Banks
The Monetary Board of the Central Bank of Sri Lanka issued Banking Act Directions No. 07 of 2017 to establish a quantitative policy framework governing foreign currency borrowings by licensed commercial and specialized banks. The Directions cap outstanding foreign currency debt as a percentage of total assets based on each institution’s credit rating and capital ratio, while permitting the Monetary Board to approve temporary excess borrowings of up to five percent under exceptional national interest circumstances. Licensed banks must secure board approval, hedge foreign exchange and interest rate risks, utilize funds for domestic lending or sovereign investments, and implement the framework effective 1 January 2018.
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