The Central Bank has directed licensed banks to offer Higher interest rates for account holders  on three transactions announced recently will come into force with immediate effect. 

Commencing 14 March, CBSL stipulated maximum interest rates that can be charged by licensed commercial banks and licensed specialised banks for the credit card advances, pre-arranged temporary overdrafts and pawning advances.

The rates are  20% per annum on credit card advances commencing from the next billing cycle.2% per annum on pre-arranged temporary overdrafts and  12% per annum on the money lent for pawning advances collateralised by personal articles made of gold accepted as a pledge, for all new pawning advances and existing pawning facilities that are renewed

 The hike was first announced on 4 March following the Monetary Policy Review after which policy rates were hiked sharply by 100 basis points.

CBSL said it has adopted monetary policy tightening measures in the recent past including an increase of policy interest rates to dampen the possible build-up of underlying demand pressures in the economy, which would, in turn, help ease pressures in the external sector, thus promoting greater macroeconomic stability.

CBSL said new rates for the three specified transactions are after considering the increase in overall market interest rates.

The rates are 20% per annum on credit card advances commencing from the next billing cycle, 18% per annum on pre-arranged temporary overdrafts,and 12% per annum on the money lent for pawning advances collateralised by personal articles made of gold accepted as a pledge, for all new pawning advances and existing pawning facilities that are renewed. 

The hike was first announced on 4 March following the Monetary Policy Review after which policy rates were hiked sharply by 100 basis points.

CBSL said it has adopted monetary policy tightening measures in the recent past including an increase of policy interest rates to dampen the possible build-up of underlying demand pressures in the economy, which would, in turn, help ease pressures in the external sector, thus promoting greater macroeconomic stability.

CBSL said new rates for the three specified transactions are after considering the increase in overall market interest rates. 

With free-floatation of the rupee the Central Bank has withdrawn the precious scheme of offering highest interest rates on foreign currency deposits by banks. 

In issuing the fresh directive, CBSL said the move was after considering the recent monetary policy tightening measures and the expected macroeconomic developments and the prevailing interest rates on foreign currency deposits. 

The Monetary Board issued an amendment to the Monetary Law Act Order No. 3 of 2021 on maximum interest rates on foreign currency deposits of Licenced Commercial Bank and the National Savings Bank, removing the existing maximum interest rate limits imposed on foreign currency deposits. Accordingly, Orders two and three of the cited order have been deleted.

Previously banks were told that with a maturity of less than or equal to one year shall be based on the simple average of the primary market yields of 364-days Treasury Bills determined at auctions held during the last calendar month of the previous quarter less 150 basis points, or 5%, whichever is higher and; with a maturity of more than one year shall be determined based on the market behaviour.

In the case of Special Deposit Accounts in FCY, the additional interest rate that can be offered or paid shall be over and above the interest rate applicable.  

The auctions for calculating the above average rate, shall be selected based on the auction date falling within the corresponding calendar month, and not the settlement date. The maximum interest rates for the forthcoming quarter shall be computed on the last working day of the current quarter

When the earlier scheme was announced on 30 December 2021 banking analysts said maximum rate could be as high as 6.5% for normal FCY deposits and 8.5% for Special Deposit Accounts