Central Bank of Sri Lanka inks pact with Reserve Bank of India

COLOMBO: The Central Bank of Sri Lanka (CBSL) and the Reserve Bank of India (RBI) have entered into a bilateral agreement, which enables CBSL to further diversify its reserves management activities into Indian rupee denominated assets.

Reciprocally, the RBI would be able to access the Sri Lankan government securities market, up to a maximum value equivalent of USD 500 million, each way.

"As a result, the CBSL could now access one of the growing securities markets in the world, realising a considerably higher return for the funds invested", the CBSL said.

Sri Lanka Central Bank Governor Ajith Cabraal signed the agreement with RBI Governor Raghuram Rajan.

Rajan later delivered a public lecture. "I suspect a fair number of foreign investors actually want you to move in a measured way so that they are not subject to surprises in terms of sharp movements when short term volatile investors leave. So, we will do it carefully and we will do it in a measured way.

"In general, the movement will be towards more liberalisation rather than away from liberalisation, but we have to do it at our pace", he said.