07 April 2011

Foreign Loans for Local Entrepreneurs in Sri Lanka. Procedure for Granting Permission Introduced

07th April 2011, www.cbsl.gov.lk

The Exchange Control Department of the Central Bank of Sri Lanka has introduced a new procedure for granting permission to obtain loans from foreign sources for projects which contribute to the economic development in Sri Lanka.

WHO WILL BE ELIGIBLE TO BORROW?
1st Category
Companies engaged in the following businesses will be considered for granting permission subject to the condition that repayments should be made out of foreign exchange earnings of the company.
• Merchandise exporters registered with the Export Development Board
• Tourism
• Tourists Entertainment Centres
• Gem and Jewellery
• Shipping
• Domestic Air Travel

2nd Category
Companies engaged in the following businesses will be considered for granting permission irrespective of the capacity to repay the loans out of foreign exchange earnings of the company.
• Agriculture, Livestock and Plantation
• Fisheries
• Food Processing
• Education and Training
• Power Generation and Transmission
• Research and Development
• Hospitals and Provision of Health and Health Care Services
• Commercial Housing Construction
• Construction of Roads and Bridges
• Mass Transportation
• Environmental Protection
• Departmental Stores
• Vehicle Assembling
• Ports & Ancillary Services
• Industrial Parks
• Urban Infrastructure (water supply, sanitation and sewage projects)
• IT Service Providers
• Heavy Industries and Manufacturing

3rd Category
Sole proprietorships in the following businesses will be considered for granting permission irrespective of capacity to repay the loans out of foreign exchange earnings of the proprietorship.
• Consultancy Services
• Handicrafts manufacturers registered with the Government Authorities
• Advertising, Publishing, Photography
• Services related to sports
• Fashion Modeling and Film Industry
• Entertainment Industry (Music, Dancing, Event Management etc.)

WHO WILL BE ELIGIBLE TO LEND?
• International Banks or Financial Institutions
• Multilateral Financial Institutions
• Foreign shareholders or parent companies of the borrowing companies
• Export credit agencies
• Individual lenders: subject to furnishing of a confirmation from the banker of his/her country of residence that he/she had been maintaining an account with the said bank at least for a period of one year prior to the date of lending along with evidence that he/she is a tax payer in the country of residence;

WHAT ARE THE STIPULATED TERMS FOR LOANS?
Maximum amount to be borrowed: USD 20 million

Repayment period: Shall be at least three years from the date of final loan disbursement

Cost of Borrowing: All costs including fees, charges and interest applicable for the loans shall not exceed the prevailing Sri Lanka’s International Sovereign Bond rate in the secondary market + 200 basis points;

WHAT COULD BE THE PURPOSE OF BORROWING?
Working capital, investment in the business, restructuring of a company or to settle existing foreign currency loans.

details of the procedure to be followed in order to obtain the approval from the Central Bank and the application form required to be submitted to the Central Bank can be downloaded from the Central Bank of Sri Lanka Website www.cbsl.gov.lk

For further information, please call on 011-2477358 or 011-2477000 – Ext. 3126.

P.H.O. Chandrawansa
Controller of Exchange
Exchange Control Department

PDF of the Notice: Foreign Loans for Local Entrepreneurs - A Support to Rapid Economic Growth


Related Info
:

Sri Lanka Allows Local Firms to Borrow Abroad for Working Capital, Investment, Restructuring or Settling Foreign Loans

Sri Lanka Relaxes Foreign Exchange Regulations. Allows Foreigners to Invest in Corporate Debt & Open Businesses, Locals to Borrow & Invest Overseas

Sri Lanka to Relax Exchange Controls Further for Local Companies, Institutions and Individuals

2 comments:

Liz said...

Are they also allowing online loan applications from other countries outside Sri Lanka? That would be good if they do give considerations to outsiders too.

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