# **Table 3 Variety of Payments Made through Money Orders and Postal Orders (Rs. Million)**

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|**Type**|**2002**|**2003**|
|---|---|---|
|Ordinary money orders|7,795.9|9,437.6|
|Telegraphic money orders|356.9|446.7|
|Fax money orders|652.2|1,147.2|
|International money orders|135.9|382.2|

_Source: Central Bank of Sri Lanka (2004)_ _Increasingly, private commercial banks have also started eyeing the remittances market._ Sensing a growing market for remittances in Sri Lanka, several banks have introduced remittance services and started aggressive marketing programs. Some banks offer a variety of products to migrants including insurance and pre-departure loans at concessional rates to be repaid from remittance proceeds. The size of the loan is determined by the level of income offered by the prospective employer and the duration of employment. Some migrants use the loans to pay their employment agency fees, passage, and settling-in costs. Box 1 below provides examples of the main products offered by commercial banks to migrants, including foreign currency accounts, insurance, accounts for minors, loan facilities, and educational programs.<sup>12</sup>

# **Box 1  Financial Products and Services Offered to Migrants by Commercial Banks**

♦ _Foreign currency accounts_ : In order to induce inward remittances, the CBSL has permitted non resident workers to open and maintain foreign currency accounts with authorized dealers. These accounts are known as “Non Resident Foreign Currency Accounts (NRFCs)”. If the account is to be maintained by a beneficiary in Sri Lanka who is a resident, the proceeds of remittance received by him are permitted to be retained in an account titled “Resident Foreign Currency Account (RFCA)”. Funds in both NRFCA and RFCA can be freely used for any purpose in foreign exchange (in the case of resident other than for acquisition of any real and financial assets abroad) and are free from income tax. These accounts offer competitive interest rates ranging from 1–2 percent over LIBOR.

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♦ _Insurance:_ Commercial banks arrange life insurance covers for migrant workers depositing money brought into the country the credit of a foreign currency account above certain threshold.

♦ _Minors’ accounts_ : Migrant workers are permitted to open accounts for minors in foreign currency in the name of their children in Sri Lanka to enable them to enjoy the benefits of retaining money in foreign currency for their future use.

♦ _Loan facilities_ : A migrant worker who remits money either to a foreign currency account or a rupee account is in a position to raise loans from authorized dealers for housing and other purposes at a low interest rate.

♦ _Pamphlets and advertisement_ : Advertisements published in printed and electronic media and various pamphlets issued by authorized dealers not only give publicity on facilities extended to migrant workers but also transparency with regard to the cost of remittances and exchange rates.

♦ _Education program_ : SLFEB jointly with the Ministry of Education conduct seminars and other educational programs to educate migrant workers, regarding banking facilities available for remitting monies to Sri Lanka and as to how such facilities should be utilized to maximize benefits on their earnings.

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