Rush for “no questions-asked” foreign exchange deposits

Sri Lanka has been inundated with requests to open Special Deposit Accounts (SDAs) declared by the government in April with everyone from foreign monthly wage earners to high net worth individuals cashing in, in a mad rush to invest.

Many bankers are hoping that this won’t be a funnel for inventive black money moguls to pump in fresh sums into the economy through these ‘no questions asked’ accounts.

Prime Minister Mahinda Rajapaksa in April announced that Sri Lankans or Sri Lankan expatriates could deposit funds in the special account for a period of six years or one year, offering additional interest rates. The SDA is a fixed deposit with a minimum tenure of six months in any designated foreign currency. This can also be opened as joint accounts and was introduced to entice foreign direct investments into Sri Lanka, to build foreign exchange reserves particularly since the country has to settle more than US$4.8 billion of foreign loans this year.

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