By Duruthu Edirimuni Chandrasekera Colombo, May 3 (Bureau) The Sri Lankan Central Bank (CB) will restrict the already open accounts being used for imports by next week which will force importers to get prior approval from the CB to bring down goods in the future. CB governor Nandalal Weerasinghe told the media recently in Colombo the ban will be issued in a gazette notice through the Import and Export Control Law. It will also stop certain exporters from ‘helping out’ importers like they have been doing by bringing goods on behalf of the latter on their bills and subsequently settling their dues off the radar. Over the last year it became such good business that some exporters resorted to this practice on behalf of a few importers, according to CB officials. The prohibition will also put a stop to the demand for unofficial transfers made through Undiyal/Hawala gross settlement systems, Weerasinghe said.
“We see that there is a large volume of money going through the Hawala/Undiyal systems and sometimes it is for imports that are not essential.” About 25 per cent of the country’s nearly $ .8 billion on a monthly basis are on open accounts and another close to 12 per cent on documents against payment/documents against acceptance (DA/DP), as per CB officials. Certain imports via open account or DA/DP terms are made instead of letters of credit (LCs) and settlements are made outside the banking system. The CB with this direction aims to reduce import bill to $1.5 billion per month, Weerasinghe said. According to industry officials, all Sri Lankan banks process only one-third of what they used to in trade finance. A banker said that banks are also grappling with corresponding banks being cautious when opening LCs for Sri Lankan traders.