Sri Lanka's central bank has begun allowing companies to borrow abroad, calling for applications from firms for loans up to 20 million US dollars.
Companies can borrow for working capital, investment, restructuring or to settle existing foreign currency loans, central bank officials said.
Borrowing costs, including interest rates
, should not exceed the prevailing Sri Lanka International Sovereign Bond rate in the secondary market plus 200 basis points, according to a central bank advertisement in local media.The repayment period shall be at least three years from the date of the final loan disbursement.
Three categories of companies are eligible to borrow abroad with one consisting of firms which have to repay loans out of their own foreign exchange earnings.
These include merchandise exporters registered with the Export Development Board, and firms in tourism and tourist entertainment centres, shipping and domestic air travel.
In the other two categories, companies and sole proprietorships which do not have to have foreign exchange earnings can borrow abroad and will have to repay loans by converting rupee earnings, central bank officials said.
These include firms in agriculture, plantations, fisheries, food processing, education, power generation, research and development, health care, construction of housing and roads, mass transportation, environmental protection, vehicle assembly, port services, information technology and manufacturing.
Sole proprietorships include those in consultancy services, handicrafts, advertising, publishing, sports services, fashion and film, and entertainment industry.
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• Foreign Loans for Local Entrepreneurs in Sri Lanka. Procedure for Granting Permission Introduced
This is a good opportunity for local Sri Lankan companies to raise money. However, there should be checks in place to monitor inflow of money from corrupt deals by some of our own ppl, i.e., politicians, officials and some businessmen too.
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