The government opened five percent of the treasury bond market last November allowing overseas investors to buy rupee-denominated sovereign debt carrying tenures of two-years and above for the first time.
Prior to this, overseas investors were only allowed to invest in equities and dollar bonds issued by the government, also known as Sri Lanka Development Bonds.
However, banks representing overseas buyers had asked monetary authorities to relax some of the minimum investment rules, to encourage more participation in the early years.
Overseas investors have to hold securities for at least a year if they plan to re-sell to a Sri Lankan resident.
The clause does not apply if the securities are sold to a foreign investor during that one year time frame.
"But some of the foreign banks representing clients wanted the one-year local sale clause to be removed, to allow investors to sell off within the next day. We agreed with them," Jayasundara said.
So far, foreign banks based in Colombo, have managed to attract 30 million rupees worth of investor interest, which Jayasundara says is "encouraging".
Overseas investors need to open a rupee account or a Treasury Bond Investment External Rupee Account (TIERA) to route their investments.
As at end 2006, Sri Lanka's outstanding debt portfolio had climbed to 1,152 billion rupees of which 901.
3 billion rupees is on account of treasury bonds and 251.
2 billion rupees in treasury bills, according to central bank figures.