Offshore banking regulations gazetted for banks set to operate at Port City Colombo

Port City Colombo yesterday announced that two regulations, Offshore Banking, and Offshore Banking – Prudent Management and Confidence, have been gazetted for commercial operations within the area of authority of the Colombo Port City Special Economic Zone. 

This was made official through the Gazette Notification 2394/66 and 2394/67 dated 26 July 2024. Being yet another key milestone in the project’s dynamic forward momentum this year, the offshore banking regulations underscore Port City Colombo’s readiness for operationalised business activity and emergence as a regional offshore financial centre in the South Asian region.

CHEC Port City Colombo Ltd., Managing Director Xiong Hongfeng said: “We are pleased to announce that offshore banking regulations have been gazetted for commercial entities who are electing to set up operations within Port City Colombo. Being a core set of regulations that will form the underlying foundation for Port City Colombo’s progressive business-friendly environment, this milestone will further strengthen global investor confidence and promote the increase of FDI inflows into the Sri Lankan economy.”

This pioneering regulatory framework will reinforce the fact that Port City Colombo is economically ring-fenced against domestic macroeconomic challenges, enabling prospective investors to directly transact in designated foreign currencies within business conditions. Similarly, to other globally competitive economies including Singapore and Dubai, investors will experience the opportunity to gain higher trading freedom, and full capital and profit repatriation, with attractive tax exemption incentives. Further, these regulations underscore to prospective investors that the funds they invest in Port City Colombo will be safeguarded, augmenting the growth of Sri Lanka as a regional Foreign Direct Investment hotspot. 

The following commercial entities could make an application to the Colombo Port City Economic Commission for a licence to engage in offshore banking business in and from the Area of Authority of the Colombo Port City Special Economic Zone: 1) A company incorporated in Sri Lanka and licensed under the Banking Act as a licensed commercial bank; 2) A company incorporated outside Sri Lanka and registered in Sri Lanka as an offshore company under the provisions of Companies Act, No. 07 of 2007, whilst being licensed under the Banking Act; and 3) A company incorporated outside Sri Lanka and registered in Sri Lanka as an offshore company, and licensed to engage in banking business under any other law in another country, but not licensed under the Banking Act in Sri Lanka. 

The regulations will further enable commercial entities to engage in permitted offshore banking activities, which include transactions in any designated foreign currency with any other offshore unit or non-resident; the acceptance of savings, time and demand deposits from any authorised person or a non-resident in any designated foreign currency; borrow in any sum in a designated foreign currency from any non-resident; and any other transactions as authorised by the Colombo Port Economic Commission with the concurrence of the Central Bank of Sri Lanka. 

With the gazetted offshore banking regulations, Port City Colombo said it aims to guide Sri Lanka towards the journey of becoming a significant regional offshore economy and commercial powerhouse in South Asia.