The Central Bank yesterday denied speculation that worker remittances will be forcibly converted into rupees under the proposed Securitised Financing Arrangement (SFA) as “completely unfounded”.

In a statement, CBSL said unfounded speculation is being spread by parties with vested interests that the recently announced request for proposals (RFP) in relation to the Securitised Financing Arrangement (SFA) is aimed at converting all worker remittances into rupees upon receipt by licensed banks.

“The Central Bank of Sri Lanka (CBSL) categorically states that there is no truth whatsoever in this allegation,” the statement said. 

It said since 28 May, licensed banks are expected to sell to the CBSL 10% of voluntary conversions of worker remittances into rupees on the strength of the additional Rs. 2 incentive provided by the Government on such conversions.

While a RFP has now been launched to explore the possibility of securitising this already existing flow to the Central Bank, the SFA will have no impact on any worker remittance, which can continue to be freely retained in foreign currency accounts in Sri Lanka or converted into rupees as done in the past.

“Accordingly, the general public is requested to remain vigilant and not to be misled by such false information,” CBSL said. 

In the meantime, in collaboration with the Government, the CBSL will continue to facilitate the enhancement of worker remittances by incentivising funds remitted through formal channels, as previously announced.

In its announcement last week, CBSL said remittances by Sri Lankans employed abroad have been an important flow of foreign exchange into the country, with an annual average value of over $ 7 billion in the past five years. 

Considering the importance of this steady non-debt inflow, the Government and the CBSL are in the process of taking steps to ensure that remittances reach their full potential in a manner that is beneficial to the worker as well as to the country.

In this regard, the CBSL is currently working in collaboration with the Ministry of Labour, State Ministry of Foreign Employment Promotion and Market Diversification and Sri Lanka Bureau of Foreign Employment, the banking sector and several other stakeholders to introduce an incentive package for migrant workers, which includes pension/superannuation benefits, accident/life insurance benefits, banking facilities including low interest loans for housing and/or self-employment on return to Sri Lanka, and enhanced duty-free concessions. 

In order to ensure that the country reaps the intended benefits of providing such incentives, this package of benefits would be made available only to those who remit their earnings to Sri Lanka through the formal banking system or any other formal money transfer system routed through banking channel, and the incentives are expected to be linked to the amount of foreign exchange so remitted to Sri Lanka. Operational details of proposed incentive package will be informed to the public in due course, in consultation with relevant Government authorities and the banking sector.

In the meantime, the CBSL urges the Sri Lankan community living abroad to ensure that their remittances to Sri Lanka are being made through formal banking channels to a designated bank account in Sri Lanka so that the value of foreign exchange so remitted to Sri Lanka could be easily tracked for the above-mentioned purposes.

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