By: Staff Writer
September 12, Colombo (LNW): Port City Colombo is set to transform into a leading regional financial center, driven by the recent enactment of Offshore Banking Regulations in parliament. This development is expected to attract significant Foreign Direct Investments (FDI) into the city with effective management and investor confidence.
Currently, discussions are underway with seven local banks and three international banking corporations to establish offshore banking branches in the Colombo Port City Special Economic Zone. Six prominent local banks, including Commercial Bank of Sri Lanka, Sampath, HNB, DFCC, NDB, and NTB, have already been authorized by the Colombo Port City Economic Commission (CPCEC) as official “Authorized Persons” (APs) to operate within this zone.
The operations of these offshore banking branches will be governed by regulations first gazetted on July 26, 2024. They will also be under the supervision of the Central Bank of Sri Lanka and the Financial Intelligence Unit, enhancing investor trust in the Port City as a regional investment hub.
These offshore banking regulations form the foundation of Port City Colombo’s financial ecosystem.
They offer a wide range of benefits to potential investors looking to establish their businesses, such as the ability to conduct transactions in designated foreign currencies with other offshore units or non-residents.
Banks can accept savings and time deposits from both Authorized Persons and non-residents, further enhancing the business environment in Port City.
Additionally, these regulations cover the extension of loans to non-residents, borrowing foreign currency, and conducting other approved financial transactions.
The offshore banking framework is expected to foster a thriving international banking ecosystem, paving the way for other financial products, including stock trading and fund management.
By enabling higher transactional efficiency and strengthening the exchange of securities, businesses can leverage their capital to expand.
Companies focused on exporting services will also benefit from enhanced foreign currency transaction flexibility, helping retain more foreign currency within Sri Lanka.
The presence of international offshore banks will boost financial stability and create opportunities for large-scale investments. The increased flow of foreign currency within Port City will help establish a circular financial economy, further contributing to the city’s economic growth.
The offshore banking system will complement the existing incentives of the Colombo Port City Special Economic Zone, which includes tax exemptions for over 25 years, 100% capital and profit repatriation, and full foreign ownership.
These benefits reinforce Port City Colombo’s ambition to become a competitive offshore economy and a premier business destination in the region.
