Sri Lanka extends validity period to open Special Deposit Accounts; permission to retain funds

Dec 01, 2020 (LBO) – The government has decided to extend the validity period of opening Special Deposit Accounts (SDAs) up to 07 April 2021 on the recommendation of the Monetary Board of the Central Bank.

The decision has been taken considering the potential of SDAs to attract a substantial amount of foreign exchange into the country and the resultant positive impact on the foreign currency reserve position.

In addition, the government has also allowed SDA holders, who wish to keep maturity proceeds of SDAs in Sri Lanka beyond the designated date of maturity, to renew and continue SDAs as normal deposits with Authorized Dealers.

“The funds held in SDAs so continued as normal deposits will be eligible only for the interest rates offered by the Authorized Dealers for normal term deposits of the respective banks,” the Central Bank said in a statement.

Upon maturity, such funds are;

i. freely convertible and repatriable outside Sri Lanka on any future date.
ii. permitted to be transferred into an Inward Investment Account or a Personal Foreign Currency
Account, if the account holder is eligible to open or currently maintain such an account.

The Central Bank said it has issued necessary Directions to Authorized Dealers (Licensed Commercial Banks and National Savings Bank) to implement the above decisions.

The Government introduced the Special Deposit Accounts on 08 April 2020 to seek assistance for the national effort to overcome the effects of the COVID-19 outbreak in the country.

Accordingly, as of 07 October 2020, total deposits in SDAs amounted to approximately USD 272 million.