(NewsRadio); The government of India has approved a new regulation permitting Sri Lankans to hold $10,000 worth of the Indian rupee (INR) in a physical form.
According to India media reports, the government of India approved the request of Sri Lanka to designate the Indian Rupee as the foreign currency.
The decision is also in accordance with the Indian government’s efforts to popularize the Indian Rupee among Asian nations and reduce dollar dependence.
The report said, Sri Lankan residents will now be able to convert the Indian Rupee into another currency and to enable this, Sri Lankan banks must sign an agreement with an Indian bank to open “INR nostro accounts” which means the accounts that banks hold in a foreign currency in another bank.
It added another important development is that offshore banking units (OBU) of Sri Lankan banks have been permitted to accept savings, time and demand deposits from non-residents.
According to the media reports, all current account transactions including exports, imports, and remittances can be undertaken between Sri Lankan residents and non-residents.
Transactions between Sri Lankans can only be done through banking channels and only for permitted activities.
While this arrangement was approved by India a few months ago, the Central Bank of Sri Lanka was yet to notify the Rupee as a designated foreign currency.