Special Deposit Accounts (SDAs), which were announced during the peak of a potential foreign exchange crisis last year, have been witnessing a slight uptick in the deposits made under these accounts despite a slump in worker remittances made through authorised channels, The Sunday Morning Business learns.
Speaking to us, a senior Bank of Ceylon official , who wished to remain anonymous, stated that even though there was a slight reduction over the past months when it came to people opening new SDAs, existing customers continue to send money from abroad.
“A reduction can be noticed in new consumers opening SDAs. We don’t see a drastic reduction in depositors sending their credit, as the interest rate is 7%, but the deposits keep fluctuating,” the official explained.
When inquired regarding the present status of deposits received via worker remittances, the official mentioned that there has been a slight improvement after the directive issued by the Central Bank of Sri Lanka (CBSL) to provide a total incentive of Rs. 10 per US dollar (USD) when converting it to Sri Lankan rupees.
We also spoke to a top source at People’s Bank, who also wished to speak on condition of anonymity. They highlighted that the deposits under SDAs are performing well, after noticing a drop in the past couple of months.
“There was a decline in deposits recently, and it is progressing right now. Therefore, there isn’t a severe drawback from depositors sending money into the accounts. But, we do see a slight change,” the official said.
Expressing similar views, a senior official from Sampath Bank highlighted that there are no major improvements in deposits received nor a significant drop in money coming into SDAs. However, the official mentioned that it is too early to comment on whether there has been an improvement in worker remittances after the directive was issued.
Attempts to reach the Commercial Bank of Ceylon, National Development Bank PLC, and Hatton National Bank for comments proved futile.
Meanwhile, responding to a query by The Sunday Morning, CBSL Governor Ajith Nivard Cabraal said this scheme had attracted deposits of over $ 500 million by the end of September 2021.
According to Cabraal, the SDAs enable funds to be remitted easily, and depositors can benefit through an additional interest paid by the Government as an incentive.
However, an exact current figure for deposits under the SDA facility could not be obtained, as attempts to reach the Treasury in this regard proved futile.
The SDA facility was introduced by the Government on 8 April 2020. Initially, it was only valid until 7 October 2020. However, due to a substantial increase in foreign exchange and the benefits of it coming into the country, the CBSL extended the SDA facility in December 2020 and April 2021.
With reference to CBSL official statistics, as of 7 October 2020, total deposits in SDAs amounted to approximately $ 272 million.
The CBSL added: “Considering the favourable effects of retaining such foreign exchange within the country, the Government of Sri Lanka has allowed SDA holders, who wish to keep maturity proceeds of their SDAs in Sri Lanka beyond the designated date of maturity, to renew and continue their SDAs as normal deposits with authorised dealers.”
Accordingly, the funds held in SDAs may continue to be held in the form of normal deposits, through which people will be eligible only for the interest rates offered by authorised dealers for normal-term deposits of the respective banks.