The Exchange Control Department of the Central Bank has introduced a new procedure for granting permission to local entrepreneurs to obtain loans from foreign sources.

Companies can borrow for working capital, investment, restructuring or to settle existing foreign currency loans, the central bank said.

Borrowing costs, including interest rates, should not exceed the prevailing Sri Lanka International Sovereign Bond rate in the secondary market plus 200 basis points.

The repayment period shall be at least three years from the date of the final loan disbursement.

Three categories of companies are eligible to borrow abroad with one consisting of firms which have to repay loans out of their own foreign exchange earnings.

These include merchandise exporters registered with the Export Development Board, and firms in tourism and tourist entertainment centres, shipping and domestic air travel.

In the other two categories, companies and sole proprietorships which do not have to have foreign exchange earnings can borrow abroad and will have to repay loans by converting rupee earnings, central bank officials said.

These include firms in agriculture, plantations, fisheries, food processing, education, power generation, research and development, health care, construction of housing and roads, mass transportation, environmental protection, vehicle assembly, port services, information technology and manufacturing.

Sole proprietorships include those in consultancy services, handicrafts, advertising, publishing, sports services, fashion and film, and entertainment industry.

Details of the procedures to followed in order to obtain the approval of the Central Bank and the application form required to be submitted to the Central Bank can be downloaded from www. cbsl.gov.lk