Use of unauthorized money remittance schemes costing Sri Lanka USD 2 billion annually

Sri Lankans remit around US $ 7.5 billion annually to Sri Lanka but due to some of them channeling these remittances through unauthorized money schemes, Sri Lanka loses US$ 2 billion of these funds. “This is the reason why the Central Bank introduced ‘SL Remit’, CBSL Governor Ajith Nivard Cabraal said.

“SL Remit is a very cost-effective App for Sri Lankan expats and increases remittances to the USD 9 billion mark, Governor Cabraal said at the launch of the new App.

The Payments and Settlements Department of the Central Bank of Sri Lanka organized the launch of the Lanka Remit National Remittance Mobile App yesterday at the Atrium, located at the CBSL, Head Office building, Colombo 01.

Cabraal added: “We do not see our remittances as being threatened; alternative methods are being adopted to remedy the issue. The Central Bank together with the banking industry had felt the magnitude of this situation. And the government has made a total commitment to stem the situation.

“We were able to set up a new scheme to address this problem. I am confident as we go on, we will be able to take the necessary steps as an industry to respond to this situation.

“Around USD 60 billion worth transactions take place at the official rate of exchange and imports amounting to nearly USD 20 billion take place at that rate; exports of about USD 20-30 billion occur at that rate as well and remittances of around USD 5.5-6 billion are sent at the same rate.

“Export of services take place at the identical rate. The government and private sector transactions, which include taking loans, paying back loans, take place at that rate. This whole host of transactions of around USD 60 billion for a year takes place at this official rate of exchange.

“However, there is a certain number of transactions that take place outside that exchange rate as well. If those transactions were to be given an estimate, it would be in the region of about USD 1-1.5 billion. Sometimes we are confronted with this contention that the exchange rate is the gray market exchange rate and therefore we should transfer all other transactions that take place to that exchange rate. That’s a fallacy which I think also needs to be addressed.”

Minister of Youth and Sports, Development Coordination and Monitoring and State Minister of Digital Technology and Enterprise Development Namal Rajapaksa said that the government has laid the foundation to digitalize the entirety of Sri Lanka.

Rajapaksa said that though Sri Lanka has a high usage of Facebook and other social media accounts and high use of smartphones, the adaptation to using money transfers via these channels was unfortunately low. While the world is bracing to digitalize payment methods, most Sri Lankans still prefer the traditional way of paying from cash, he added.

(Source: The Island – By Hiran H.Senewiratne)