Sri Lanka withdraws bonus interest on forex deposits

Oct 08, 2009 (LBO) – The Sri Lankan government has stopped paying bonus interest on the interest earned on foreign currency deposits in banks, the Sri Lanka Banks’ Association said. The Central Bank has withdrawn the payment of bonus interest in rupees on interest paid to foreign currency accounts from October 1, the association said in a notice to all resident and non resident account holders.

The scheme for the government to pay 20 percent bonus interest in rupees on the interest earned on foreign currency deposits in banks was introduced on February 1 this year

The move was aimed at promoting inward remittances and deposits of foreign currency and building foreign exchange reserves.

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

Sri Lanka’s foreign reserves have swelled in recent months after the government got a stand-by loan from the International Monetary Fund and foreign investors also bought into government bonds.