Bonus Interest

Jan 27, 2009 (LBO) – Sri Lanka’s Central Bank said the government will pay a 20 percent bonus interest in rupees on the interest earned on foreign currency deposits in banks from February 1. “This aims to promote inflows of foreign remittances into Sri Lanka through the banking channels as well as to promote the general public to deposit any foreign currencies held by themselves with banks,” the statement said.

“Such inflows of foreign exchange into the banking system will make available more resources for the banks for their lending operations, thereby effectively utilising such resources to promote investments.” The move is part of efforts to promote inward remittances and deposits of foreign currency and build foreign exchange reserves, the bank said in a statement.

The tax-free bonus interest will be credited to a rupee account opened in the account holder’s name or to any other nominated account.

The bonus interest will not be credited to Resident Foreign Currency Accounts and Non-Resident Foreign Currency Accounts through which Sri Lankans can deposit foreign currency.

The interest paid on the RFC and NRFC accounts are already exempt from income tax.

The bonus