Sri Lanka's Central Bank has directed commercial banks with immediate effect that Letters of Credit (LCs) should not be opened for the importation of non-essential goods (see below) unless such LCs are covered by a non-interest-bearing cash margin deposit requirement of 100 percent maintained at the time of opening the LC.
Banks have further directed that the following conditions shall also be applicable for the importation of goods covered by this Order.
a) The cash margin deposit requirements shall be on the total value of the invoice, notwithstanding the fact that the same invoice includes goods which are not covered by this Order.
b) In the case of existing LCs covering the importation of goods covered by this Order, no increase in the value of such LCs shall be permitted by LCBs unless such increase is covered by the cash margin deposits as required in (1) above.
c) LCBs shall not grant any advances to their customers for the purpose of enabling such customers to meet the cash margin deposit requirement imposed by this Order.
d) LCBs shall endorse the relevant invoice certifying whether the cash margin deposit as per this Order has been maintained.
e) The margin deposit shall be released on the production of documentary evidence on payments through the banking channels in Sri Lanka and the Customs documents relating to clearance of imports.
The provisions of this Order will have effect in addition to any requirement in force for the time being and such other requirements that may be introduced in terms of any law in respect of importation of goods.
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