Lanka ORIX Finance & IFAD Help Manage Foreign Currency Remittances of Migrant Worker Families

25th February 2012, www.island.lk

Lanka ORIX Finance (LOFC), a financial institution with one of the largest deposit bases in the Registered Finance Company sector, entered into a landmark partnership with the International Fund for Agricultural Development (IFAD) headquartered in Rome, Italy to implement a special program to uplift the living standards of rural poor in Sri Lanka by conducting a series of educational programs.

The aim of the initiative is to raise awareness among migrant worker families on meaningful financial management and investment, they hope to economically empower rural Sri Lankans who seek foreign employment through financial inclusion. Migrant workers are given assistance in setting financial goals through special training programs and thereafter guidance and support to achieve same.

"The aim of doing this project is Economic Prosperity for Rural Poor through Remittances Disbursed via Lanka ORIX Finance" says, Mr. Brindley de Zylva, Managing Director/CEO.

Explaining the benefits behind this program Mr. de Zylva added, "This program will offer them a free life insurance cover though the Insurance arm of the Group, LOLC Insurance Company Ltd which will cover any unexpected visits back home in case of a bereavement of an immediate family member or on loss of employment of the Migrant Worker. "

Similarly, the company has linked with LOLC Micro Credit Company Ltd to offer micro loans for income generating activities to reduce the dependence on remittances and ensure a source of sustainable income hastening the return journey of the migrant worker.

In order to ensure that their remittances reach their loved ones safely back home, LOFC has partnered exchange houses such as Xpress Money, Valutrans and Money Exchange – Spain. Lanka ORIX Finance is the only non-banking institution in Sri Lanka to have joined the SWIFT network and be listed in the Bankers Almanac.

Adding further Mr. de Zylva said, "Since launching our Fixed Deposit schemes and our new value additions for Foreign Currency Business, we have attracted many Sri Lankans with investments in Foreign Banks to place these deposits with us. This is a testimony to the strength and stability of LOFC. We also offer better returns for their investments and value added benefits in Sri Lanka."

Senior Citizens are given special treatment with higher interest rates and an emergency medical scheme covered by a strategic alliance with Medicalls.

Nearing a decade of experience as a RFC, Lanka ORIX Finance is the only Finance Company backed by a global financial giant, the ORIX Corporation of Japan and the first/only RFC authorized by the Central Bank of Sri Lanka to engage in foreign currency business. At present, the Company has an island wide presence through its footprint of over 50 branches strategically located at various parts of the island.

Related Info :• Asia Microfinance Forum 2010 in Colombo, Sri Lanka from 12-15 October Sponsored by LOLC

Citi Bank RMB Settlement Service in Sri Lankae will Eiminate Cross Currency Exchange Risks as Trade with China Continues to Grow

11th January 2012, www.news360.lk

Citi’s global transaction services has launched its renminbi settlement services in Sri Lanka, said a Media report.

The latest move of the Citi comes as the trade volume between Sri Lanka and China continue to grow.

The report says this solution will help Sri Lankan firms by eliminating cross currency exchange risks.

The new Service is aimed at enabling companies to open and maintain renminbi accounts in renminbi with Citi, and make renminbi payments directly to the beneficiaries.

The service by Citi in Sri Lanka follows after the country recognized the Chinese currency as a settlement currency.

Trade between Sri Lanka and China is growing as the Asian giants influence and engagement in the Island is growing.

China has already financed or in the process of financing key infrastructure development projects in Sri Lanka including financing the Hambantota Port.

Related Info :

• Sri Lanka, Mongolia & Iraq to Lead Growth States of 2050, 3G Index of Global Growth Generators of Citibank Chief Economis

How to Invest in SFIDA Sri Lankan Bank Accounts for Higher, Tax Free Returns

Special Foreign Investment Deposit Accounts - SFIDA

Now foreign citizens/institutions and Sri Lankans resident overseas can invest in Sri Lanka and earn best returns on your foreign currency with a Special Foreign Investment Deposit Account, SFIDA.

You have the option of maintaining your SFIDA account in a designated foreign currency and earn a higher interest than what you could earn in most other Financial Centres, or maintaining your SFIDA account in Sri Lankan Rupees (LKR) and get a much higher return of app. 8 to 10pct.

All SFIDA accounts are exempted from Income Tax, Withholding Tax, Debit Tax and other levies. At maturity, your capital and interest can be converted to any of the designated currencies of your choice at the prevailing exchange rate and repatriated without any exchange control restrictions.

SFIDA accounts range from one month to 12 months, and the interest rate applicable will vary depending on the prevailing market rate.

Eligible Investors to Open an SFIDA Account
• Citizens of foreign states
• Sri Lanka citizens resident outside Sri Lanka
• Corporate bodies incorporated outside Sri Lanka
• Foreign institutional investors (eg. Country funds, mutual funds, regional funds)
• Note: Joint accounts held by two or more eligible investors are also allowed

Type of SFIDA Accounts
• Savings Deposits in designated Foreign Currencies or in Sri Lankan Rupees
• Time Deposits in designated Foreign Currencies or in Sri Lankan Rupees

Permitted Currencies
Investment can be maintained in a Sri Lanka Rupee account or a foreign currency account (US Dollar, Sterling Pound, Euro, Australian Dollar, Canadian Dollar, Hong Kong Dollar, Singapore Dollar, Japanese Yen, Swedish Kronar, Swiss Francs or any other type of designated foreign currency).

Minimum Investment and Minimum Account Balance
US$ 10,000/= or its equivalent in any of the designated foreign currencies or equivalent amount of Sri Lanka Rupees.

Tax Exemption
All SFIDA accounts are exempted from Income Tax, Withholding Tax, Debit Tax and other levies.

Rate of Interest - General Guidelines
• For Sri Lanka Rupee accounts prevalent interest rates stipulated in the Treasury Notice.
• For foreign currency deposits prevalent interest rates applicable to NRFC accounts of the relevant bank.
• Note: For larger deposits, interest rates could generally be negotiated.

Permitted Credits
• Proceeds of inward remittances received from abroad through banking system.
• Foreign currency in the form of travellers' cheques, bank drafts or bank notes brought in to the country by the account holder on the declaration to Sri Lanka customs as applicable during his temporary visits to Sri Lanka and tendered in person to the Authorised Dealer, provided that the travellers' cheques have been issued outside Sri Lanka and the bank drafts endorsed in the name of the account holder.
• Interest accruing on the funds held in the account.

Permitted Debits
• Outward remittances
• Transfers to other SFIDA accounts
• Disbursements of the account holder in Sri Lanka
• Relevant statutory payments such as debit tax

Additional Information
• Sri Lankan Banks offering SFIDA Accounts
• Commercial Bank, Sri Lanka offers SFIDA Accounts for Foreign and Sri Lankan Investors

Related Info :
• Securities Investment Accounts (SIA) Replace SIERA & TIERA Accounts - For Investment in Sri Lankan Equity, Debt and Unit Trusts
• Sri Lanka Offers Special Visas to Investors, Professionals & Senior Citizens

Foreign Currency Accounts for Sri Lankan Overseas Service Providers and Their Employees

07th May 2010, www.cbsl.gov.lk

Sri Lankan companies providing a range of international services and their employees earning foreign exchange are now allowed to open foreign currency accounts at commercial banks, informs a Press Release issued by the Exchange Control Department of the Central Bank of Sri Lanka.

Foreign Currency Accounts for International Services Providers and their Employees
It has been decided to grant permission for international services providers and their employees to open and maintain foreign currency accounts in Licensed commercial banks in Sri Lanka with effect from 07th May 2010.

Any resident company or partnership registered in Sri Lanka or any individual resident in Sri Lanka who are providing the following categories of international services and their employees are eligible to open and maintain these foreign currency accounts:

• Accounting, book keeping or auditing;
• Tax advisory services;
• Services of a draftsman;
• Engineering services;
• Software development, data processing, data base development or system designing;
• Advertising outside Sri Lanka;
• Research work and report writing;
• Photography;
• Publishing outside Sri Lanka;
• Beauty culture, hairdressing or modeling outside Sri Lanka;
• Services of a sports person or an artist;
• Services of a valuer or auctioneer;
• Services of a plumber, mason or carpenter;
• Quantity surveying;
• Health care services;
• Management of any agricultural property situated outside Sri Lanka;
• Services rendered by any individual as a member of an organized profession with a recognized standard of ability enforced before such person entering to it and recognized standard of conduct enforced while practicing in it.

These accounts may be opened in the form of current, savings or term deposits and credits to the accounts are confined to proceeds on international services received from abroad through banking channels, employment income paid out of foreign currency received by an employer and interest accruing on the funds held in the account. Employers can make the payments in foreign currency in the form of bank transfers to their employees who are directly involved in the projects carried out by the employer by debiting the said account. Further, debits to these accounts can also be made to make payments in foreign currency outside Sri Lanka on account of permitted transactions for residents in Sri Lanka. Any other withdrawals from these accounts should be in Sri Lanka rupees.

These new measures will allow international services providers and their employees to avail themselves with income tax exemptions granted by the Inland Revenue (Amendment) Act No. 19 of 2009.

Related Info:
Sri Lanka Relaxes Exchange Controls from March 11 in the First Phase of Foreign Exchange Liberalization Plan

How to Invest in Sri Lanka Government Securities - Treasury Bills and Bonds

Sri Lanka Treasury Bills and Bonds attract foreign investors for a number of reasons. Prime among them are the stability of the booming economy of Sri Lanka and the higher interest rates offered on these government debt instruments compared to similar securities from other countries especially US and Europe. Sri Lanka Treasury Bills and Bonds are Tax Free as withholding tax is charged at source. Pl See: Current Rates on Treasury Bills and Bonds - Central Bank of Sri Lanka 

What is a Treasury Bill?
Treasury bill is a short term debt instrument of 3, 6 or 12 Months issued by the Government of Sri Lanka. Treasury Bills are discounted instruments - the investor pays the discounted value (investment value) and receives the face value on maturity. Government issues Treasury Bills through weekly auctions and interest is decided based on the bids received.

What is a Treasury Bond?
Treasury Bond is a medium to long term debt instrument of 2 to 20 Years issued by the Government of Sri Lanka. Treasury Bond carries a coupon (interest) which is paid on a half yearly basis, and the principal is repaid on maturity.

What is Sri Lanka Development Bond?
Sri Lanka Development Bonds (SLDBs) are a debt instrument denominated in US Dollars issued by the Government of Sri Lanka. Interest is paid to the holder every six months and the principal repayment is made at the end of the maturity period. Calculation of interest payments will be based on the six month London Inter Bank Offered Rate (LIBOR) for USD per annum plus a margin determined through competitive bidding at the auction.

Who Issues Treasury Bills/Bonds?
As an Agent of the Government of Sri Lanka, the Public Debt Department of the Central Bank of Sri Lanka (CBSL) issues the Treasury bills and Treasury Bonds, and in the case of Treasury Bills repays maturity proceeds on maturity, and for Trasury Bonds pays interest on due dates and repays the principal on maturity.

Types of Government Securities
• Rupee Denominated Securitie
• Treasury Bills : Available to foreign investors, Sri Lankan diaspora living/working abroad and Sri Lankan citizens.
• Treasury Bonds : Available to foreign investors, Sri Lankan diaspora living/working abroad and Sri Lankan citizens.
• Inflation-linked Bonds : Available only to Sri Lankan citizens.
• Foreign Currency Denominated Securities
• Sri Lanka Development Bonds : Available to foreign investors, Sri Lankan diaspora living/working abroad and Specified Companies.

How to Invest in Government Securities?
Investors can purchase Treasury Bills/Bonds either from auctions in the primary market through a designated Primary Dealer (PDs) on specified dates, or from the secondary market through Primary Dealers, Commercial Banks or the Joint Lead Managers in the case of Sri Lankan Diaspora business on any week day.

Can I Invest in Treasury Bills/Bonds?
Yes, if you are one of the following,
a) Foreign institutional investors such as foreign country funds, mutual funds and regional funds.
b) Corporate bodies incorporated outside Sri Lanka.
c) Citizens of foreign states.

What are the Main Features of Treasury Bills?
• Risk free, gilt edged debt instrument
• Short term debt instrument (3 to 12 months)
• Maturity proceeds (Face value) will be paid on maturity
• Yield rates are determined by the market
• Tradable instrument in the secondary market
• Issued in scripless form

What are the Main Features of Treasury Bonds?
• Risk free, gilt edged debt instrument
• Maturities are available with 2-20 years
• It carries half yearly coupon payments and the principal is repaid on maturity
• Yield rates are determined by the market
• Tradable instrument in the secondary market
• Issued in scripless form

What Benefits Can I Derive by Investing in Treasury Bills/Bonds?
• It is an absolutely risk free investment, since it is issued by the sovereign government. Hence, they are called gilt-edged securities meaning that they are covered by gold.
• You can get the highest rate of interest since the yield rates are determined in the market.
• Since these bills/bonds are tradable in the secondary market, you can obtain instant liquidity by selling them in the market.
• All receipts of interest, maturity proceeds and capital gains are fully repatriable.
• You could also have a joint investment with some other person or persons. Hence, it is a very good way to share your investments with loved persons.
• You are not subject to further taxation, since a withholding tax of 10 percent is charged at source is the final tax.
• No stamp duty is payable on these bills/bonds.
• You can get the best service from the CBSL which maintains your investment in its state of the art, Scripless Security Settlement System and the fully automated Central Depository System (CDS).

What is the Availability of Treasury Bills/Bonds to a Foreign Investor?
• Foreign investors can purchase up to 10% of the total outstanding Treasury Bills or Bonds at any given time.

According to Central Bank data foreign investors held Rs 212 billion of bonds up from Rs 199 billion on January 04 2012. Treasury bills holdings rose to Rs 84.5 billion from Rs 70.1 billion in the same period there amid periodic changes.

How Can I Apply for Treasury Bills?
• You can purchase Treasury bills at any time through Primary Dealers (PDs) or Licensed Commercial Banks (LCBs) registered with the CBSL. PDs are the institutions appointed by the CBSL for trading in Government securities. Contact details of these institutions are given below.
• You can purchase Treasury bills by sending bids to the primary auctions through PDs or through direct placements.
• In order to make arrangement for fund transfers, you can advise your own bank to open a Rupee account named “Treasury bill Investment External Rupee Account - 2 (TIERA - 2)” in an LCB in Sri Lanka. (Note: Securities Investment Accounts (SIA) replace TIERA-2).
• After completing the transaction, your agent (LCB/PD) will open a security account for you in the CDS maintained by the CBSL. This account is debited /credited simultaneously based on your tradings in the market.

How Can I Apply for Treasury Bonds?
• You can purchase Treasury bonds at any time through Primary Dealers (PDs) or Licensed Commercial Banks (LCBs) registered with the CBSL. PDs are the institutions appointed by the CBSL for trading in Government securities. Contact details of these institutions are given below.
• You can purchase Treasury bonds from the secondary market or you can even send bids to the primary auctions through PDs.
• In order to make arrangement for fund transfers, you can advise your own bank to open a Rupee account named “Treasury bond Investment External Rupee Account (TIERA)” in an LCB in Sri Lanka. (Note: Securities Investment Accounts (SIA) replace TIERA).
• After completing the transaction, your agent (LCB/PD) will open a security account for you in the CDS maintained by the CBSL. This account is debited /credited simultaneously based on your tradings in the market.

What is Primary Market?
• Information on auctions for Treasury Bills and Treasury Bonds are normally announced in the leading newspapers at least two days prior to the auction date.
• Treasury Bond series available for foreigners are announced by the Public Debt Department via e-mail to all participants in the Central Depositary System.
• In the case of Treasury Bills, newspaper advertisements are published on every Monday and the auctions are held on Wednesdays. Bids are accepted through the fully automated online bidding system.
• Treasury Bills are issued weekly, while 3-4 Treasury Bond auctions are held every month based on the Government's cash requirement.
• All investors who are willing to participate in primary auctions should submit their bids through Primary Dealers before 11 a.m. on the auction date which is the Primary Dealer's deadline for submission of bids to auction. The successful bidders are informed within two hours of the deadline for the submission of bids. Press releases are published in leading newspapers on the following day.
• Settlement of successful bids in the primary market is on two business days after the auction date (T+2). Sri Lanka Government debt securities are scripless and therefore securities transfers take place on an electronic basis. Settlement is via the electronic payment system and the Real Time Gross Settlement System on a delivery vs. payment basis.
• Investors are required to maintain accounts with Commercial Banks or Primary Dealers for cash settlement for their transactions as well as for the crediting of coupon payments. Ownership of securities is recorded in the Central Depository System maintained by the Central Bank of Sri Lanka.

What is Secondary Market?
• An investor can either hold a tradable security until maturity or sell in the secondary market prior to maturity at the current market price.
• Investors can also buy tradable securities already issued to the market by the Central Bank of Sri Lanka.
• Primary Dealers/Commercial Banks quote buying and selling prices of Treasury Bills, Treasury Bonds daily for different maturities. Investors can shop around and bargain to obtain attractive market rates for these securities.
• Sri Lankan Government debt securities are scripless and the securities transfer is done on an electronic basis. In the Scripless Securities Settlement System (SSSS) transfer instructions are carried out on a trade-by-trade basis, with the transfer of securities and the transfer of funds for payment taking place simultaneously.

Who are Primary Dealers?
Primary Dealers are institutions appointed by the Central Bank of Sri Lanka for marketing government securities in the secondary market. Primary Dealers are also responsible for supporting the primary auction and are the major participants in the competitive bidding process. Primary Dealers are required to provide liquidity in the secondary market by quoting bid and offer yields for government securities.

How Can I Collect Maturity Proceeds?
• Interest (for Treasury Bonds) and Maturity proceeds (for both Treasury Bills and Bonds) relating to Treasury Bills/Bonds are credited on due dates directly to your account through your agent. The participants of the CDS are responsible to pay dues to you on due dates.

How do I Get More Information on Treasury Bills/Bonds?
• Details on available Treasury Bills and prevailing market rates can be obtained from LCBs, PDs and CBSL Website (www.cbsl.gov.lk)
• Details on current auctions can be obtained from PDs and LCBs.
• Any detail on this scheme can be obtained from the Public Debt Department of the CBSL.
Telephone: 94 11 2 477277 /212 /274//276 /278/316
Fax: 94 11 2477718/719/759
e-mail: pddrbw@cbsl.lk

List of Participating Agents - Licensed Commercial Banks (LCBs) and Primary Dealers (PDs)
• List of Licensed Commercial Banks (LCBs)
• List of Primary Dealers (PDs)

Market Information - Primary Market
• Last Treasury Bill Auction (Press Release)
• Last Treasury Bond Auction (Press Release)
• Treasury Bill Auction Historical Data (1996-2009)
• Treasury Bond Auction Historical Data (1997-2009)

Market Information - Secondary Market
• Two Way Quotes and Market Rates for Treasury Bills and Bonds. Please see latest Weekly Economic Indicators.

Additional Information on Treasury Bills and Treasury Bonds
• Available Treasury Bond Series
• Sri Lanka Development Bonds - Latest Issue
• Outstanding Government Debt Stock - Monthly Economic Indicators
• ‘LankaSecure’ - Scripless Securities Settlement System (SSSS) and CDS
• Exchange Rates

• Treasury Bills for Foreign Investors
• Treasury Bonds for Foreign Investors
• Treasury Bills and Bonds for Sri Lankan Diaspora

Related Info :
• Securities Investment Accounts (SIA) Replace SIERA & TIERA Accounts - For Investment in Sri Lankan Equity, Debt and Unit Trusts
• Sri Lanka Offers Special Visas to Investors, Professionals & Senior Citizens