No restrictions on taking out investment returns - CB official | Sunday Observer

No restrictions on taking out investment returns - CB official

There are no restrictions on remitting out investment returns made through the Securities Investment Account (SIA), Exchange Controller Yvette Fernando said yesterday.

In an official clarification following last week´s Insight report ‘Changing perceptions in investment landscape’, the Controller stated that the Central Bank of Sri Lanka (CBSL) has issued directions to authorised dealers, i.e., licensed commercial banks, prescribing the eligible persons to open SIAs and permitted credits and debits to SIAs.

“Hence, there is no requirement for a foreign investor to seek prior approval of CBSL to invest through a SIA and remit out returns of such investment, provided that investments are made in accordance with the Gazette notification issued in this regard,”the Controller said.

“There are no restrictions to remit out investment returns under the Exchange Control Act, if such investments are made through SIAs,” he said.

The Insight report highlighted a comment by an investor who was told by an official of the State owned People´s Bank that regulator input was necessary when the investor inquired in writing what regulations may apply for monies bought in through an SIA, when such money was to be remitted back to origin.

Insight quoted the investor as stating, “Where as per the direction issued to Authorised Dealers by the Central Bank on June 12, 2013, in so far as any credits (as defined in the directive) to such accounts, including inward remittances received from abroad directly through international banking channels (paragraph 3.i of the directive) can be remitted back as per paragraph 4.i of the directive, and with the exchange control department´s website clearly stating that the returns of investments made through the SIA such as sale proceeds and profits can be remitted back without referring to the Exchange Control Department, subject to the terms and conditions stipulated in the directive, the bank replied saying that regulatory restrictions will apply.”

According to the document that is being cited by the investor, the bank states that the regulator may stop if so deemed necessary in answer to the first query. In reply to the second, the bank said if the sum of money is for purposes of meeting the equity requirement, then there could be restrictions on transfer.

The Sunday Observer reached out to the People´s Bank for their response in light of the clarification by the Exchange Controller that there are no such restrictions. However, the Bank was unable to provide a ‘considered’ response and have indicated that a complete response will be provided later this week.