Businesses in Sri Lanka can now settle trade and investment payments with China directly in renminbi (RMB) through the country’s first RMB clearing bank.
Bank of China Colombo branch began operations as an RMB clearing bank last Thursday after receiving authorization from the People’s Bank of China (PBOC).
The new facility allows banks and businesses to maintain RMB accounts, make cross-border RMB payments with China and settle RMB payments locally.
Until now, local banks handling RMB transactions generally routed payments through correspondent bank accounts in China. This could add processing time and involve more intermediaries.
Direct RMB Payments Could Cut Costs
The new arrangement could also help importers avoid converting rupees into US dollars and then into RMB.
That process can add conversion costs and expose businesses to more than one exchange rate.
K.G.P. Sirikumara, Deputy Governor of the Central Bank of Sri Lanka (CBSL), said the clearing facility could improve payment efficiency and make RMB transactions more convenient.
However, he said its success would depend on how widely banks and businesses use the service.
China is the country’s largest source of imports. Imports from China reached USD 5.15 billion in 2025, up 16% from the previous year, according to Export Development Board data.
Exports to China rose 10% to USD 279 million during the same year.
The size of this trade gives the new RMB settlement facility a large potential user base among importers and exporters.
Clearing Bank Could Link to CIPS
The new facility could also help local financial institutions explore access to China’s Cross-Border Interbank Payment System (CIPS).
CIPS supports cross-border RMB payments through standardized payment messaging and settlement arrangements.
Sirikumara said the idea of establishing an RMB payment facility between the two countries was first discussed at an RMB Internationalization Forum in Colombo.
He also called on commercial banks to work with Bank of China Colombo, explore its services and build awareness among customers.
Importers and exporters have been encouraged to assess whether RMB settlement would be suitable and cost-effective for their businesses.
CBSL will work with the PBOC, Bank of China and licensed banks as the new arrangement develops.
The Colombo facility also forms part of China’s wider expansion of its overseas RMB clearing network, following appointments in London, Indonesia and Frankfurt this year.
Last modified: October 19, 2026
