Port City Colombo announced that Parliament officially passed two key offshore banking regulations, Offshore Banking and Offshore Banking – Prudent Management and Confidence, on September 4, 2024. This significant development aligns with Port City Colombo’s ambition to establish itself as a prominent regional financial centre, attracting increased Foreign Direct Investment (FDI) into Sri Lanka.
Seven local banks and three international banking corporations are currently in discussions to establish offshore banking branches within the Colombo Port City Special Economic Zone. Additionally, six local banks—Commercial Bank of Sri Lanka, Sampath, HNB, DFCC, NDB, and NTB—have been approved as Authorised Persons (APs) by the Colombo Port City Economic Commission (CPCEC).
These offshore banking operations, governed by the new regulations gazetted on July 26, 2024, will operate under the supervision of the Central Bank of Sri Lanka and the Financial Intelligence Unit. This oversight further bolsters investor confidence in Port City Colombo as an emerging regional investment hotspot.
The newly approved offshore banking regulations provide a robust framework for international banking at Port City Colombo, allowing investors to engage in a range of foreign currency transactions. These include direct transactions, deposits, loans, and borrowing, all conducted in designated foreign currencies. The regulations are also expected to facilitate a wider range of financial products, such as stock trading and fund management, increasing transactional efficiency and strengthening Sri Lanka’s foreign currency retention.
International banks establishing offshore branches will contribute to greater financial stability, enabling large-scale investments and fostering the development of a circular financial economy. Port City Colombo’s Special Economic Zone also offers enticing incentives, including tax exemptions for over 25 years, 100% capital and profit repatriation, and 100% foreign ownership.
With this approval, Port City Colombo is well-positioned to become a competitive offshore economy and a prime business destination in the region, signaling its readiness for active commercial operations.