NEW DELHI: The Central Bank of Sri Lanka (CBSL) has clarified that though the Indian rupee has been authorised as designated foreign currency, it is to promote trade and investment relations between the two countries and reduce the additional transaction costs associated with dual conversion.
The legal tender in Sri Lanka for domestic payments and settlements will remain as Sri Lankan Rupees (LKR), it said.
Since India is a large source country for tourism in Sri Lanka, authorising INR as a designated foreign currency for banking transactions will add more convenience to Indian tourists. It does not make INR a legal tender in Sri Lanka for domestic payments. Any transaction executed between or among residents in Sri Lanka shall be in LKR, being the legal tender in Sri Lanka, it added.
In August 2022, with the concurrence of RBI, INR was authorised by CBSL as a designated foreign currency.