Interest Limit

Jan 04, 2010 (LBO) – Sri Lanka’s Central Bank said it has raised the ceiling on interest rates paid by registered finance companies and also allowed them to pay extra interest to senior citizens over 60 years from January 1. In revising the interest rates, the Monetary Board has considered the declining trend in market interest rates and the need for addressing the liquidity constraints of finance companies, the statement said. The limit on finance company interest rates on short-term fixed deposits of one-year or less was raised to four percentage points above the preceding quarter’s weighted average 364 day Treasury Bill (T-Bill) rate, a Central Bank statement said.

The central bank had reduced the ceiling on a one-year fixed deposit to two percent above the 364 day T-Bill rate on 1 April 2008.

For deposits over 12 months, finance companies may pay additional five percentage points over the weighted average yield on 364 -day T-Bills, the Central Bank said.

On savings deposits, finance companies may pay interest not exceeding the weighted average yield on 91-day Treasury Bills.

The present 91-day T-Bill rate is 7.67 percent.

The Central Bank also said that finance companies can pay an additio