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Understanding informal remittances during a crisis: Experience from Sri Lanka

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IPS Policy Insights

by Dr Bilesha Weeraratne, Piyumi Ranadewa and Manisha Weeraddana, January 2024

Remittances carry vast economic implications for recipient countries at both macro and micro levels. The choice to send remittances through formal channels such as banks, registered money transfer operators, and online platforms, as opposed to informal avenues like Hawala/Undiyal operators or family networks, plays a pivotal role in achieving positive outcomes for migrants, their families, and the broader society of these nations.

The recent foreign currency crisis and subsequent economic downturn in Sri Lanka, partly linked to the decrease in remittance inflows, underscore the increased importance of understanding remittance channels, especially during crises. However, gaining an understanding of the market for informal remittances is hampered by the intrinsically hidden nature of such activities, which has led towards limited data availability. By recognising these gaps in the existing literature, this study aims to bridge the knowledge deficit by delving into the realm of informal remittances, focusing on the use of informal remitting channels in Sri Lanka during an economic crisis. The study relies on qualitative data while utilising a thematic approach towards data analysis in presenting empirical evidence addressing two specific research:

1) What are the characteristics of the informal remittance channels used by Sri Lankans?

2) What are the implications of informal remittances on the economic crisis in Sri Lanka?

The study derives information from a range of sources, such as extensive desk research and qualitative data collected via 19 key Informant Interviews. The interviewees represent migration-related stakeholders (the IOM, State Ministry of Foreign Employment Promotions & Market Diversification and Sri Lanka Bureau of Foreign Employment), five remittance-related stakeholders (the Central Bank, private and public sector banks and financial institutions), three researchers, seven migrant workers ( three low skilled and four high skilled) currently working in the UAE, Japan, Malaysia, and Saudi Arabia, engaged in domestic work, technical, government or banking sector etc. Qualitative data were also collected from respondents with experience regarding outward informal remittances. The determination of the sample size was based on reaching the point of saturation, where no new information emerged in subsequent interviews. Furthermore, the sample composition was guided by employing the maximum variation sampling technique. To focus on remitting behaviours surrounding informal channels during times of crisis, data were collected between May and August 2022.

Findings

Prior to the economic crisis, formal channels effectively channelled remittances, but the widening cost disparity amid the crisis drew more workers towards informal sectors.

While using informal channels raises concerns such as potential misuse for criminal activities and economic penalties, individual risks are overrated, with a low likelihood of negative outcomes.

The regulatory framework for remittances varies across countries, reflecting local needs and conceptualisations.

Factors influencing channel choice include cost, transaction speed, and no transaction limitations, convenience, accessibility, and anonymity.

Hawala/Undiyal systems emerged as widely used informal channels, especially among low-skilled migrants. Trust and confidence in these unregulated systems minimised the perceived risks.

For irregular migrants, the added benefit of anonymity in informal channels has shown to be particularly advantageous.

During the economic downturn, trust in the regulatory framework diminished due to new policies, pushing workers towards informal channels.

Using formal channels persisted among those aware of legal requirements and with access to digital platforms.

Some high-skilled workers explored alternatives like cryptocurrencies.

Exchange rate volatility, rupee depreciation, and increased control over remittances steer migrants towards informal channels during crises.

Recommendations

As informal channels gain widespread popularity, controlling their usage becomes a considerable challenge. The study outlined the following recommendations to provide a comprehensive understanding of the intricate dynamics associated with informal remittances and contribute to effective measures for managing their impact.

Enhancing awareness:

About personal and national consequences of informal channels.

How to distinguish between formal and informal operators.

Enforcement of regulations pertaining to informal remittances.

Lowering the cost of remittances through formal channels and aligning exchange rates with market rates.

Shifting formal channels from rules-based to risk-based approaches in implementing documentary and identification requirements within KYC policies.

Tailoring incentives for formal channels to cater to the specific needs of migrant groups and ensuring that migrants are well-informed about potential benefits of formal channels.

Removing national and international barriers hindering access to formal channels.

This policy insight was prepared by IPS researchers Dr Bilesha Weeraratne (bilesha@ips.lk), Piyumi Ranadewa and Manisha Weeraddana based on findings from a study on ‘Understanding Informal  Remittances During a Crisis: Experience from  Sri Lanka’ authored by Dr Bilesha Weeraratne, Thilini Bandara & Thisuri Ekanayake under The South Asia Centre for Labour Mobility and Migrants (SALAM) project conducted by IPS. For more policy insights from IPS, visit: https://www.ips.lk/publications/policy-insights/.



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Global regulators convene in Colombo for key IOSCO enforcement and cooperation discussions

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Dignitaries at the wide-ranging discussions.

The Securities and Exchange Commission of Sri Lanka (SEC) successfully hosted a series of high-level meetings of the International Organization of Securities Commissions (IOSCO), bringing together leading securities regulators and enforcement officials from around the world to discuss emerging regulatory challenges, strengthen international cooperation, and enhance collective efforts to combat cross-border securities market misconduct.

The meetings, held at the Hilton Colombo from 13 to 16 October 2026, included sessions of the IOSCO Enforcement and Cooperation Committee and its Screening Group (Committee 4/SG), as well as meetings of the Monitoring Group and the Steering Committee. The event attracted approximately 50 senior representatives from securities regulators and exchanges across several jurisdictions, including Australia, Japan, the United States, the United Kingdom, France, Italy, Canada, New Zealand, India, Germany, Belgium, Singapore, China and Spain, reflecting the global significance of the discussions and the growing importance of international regulatory collaboration.

Welcoming delegates to Sri Lanka, Senior Professor D.B.P.H. Dissabandara, Chairman of the SEC, emphasized the critical role of international cooperation in safeguarding market integrity and investor confidence in an increasingly interconnected financial landscape.

“No regulator can effectively address cross-border misconduct in isolation. The speed with which information, transactions and illicit activities can move across borders requires an equally coordinated and timely regulatory response. Strong international cooperation, effective information sharing and mutual trust among regulators are essential to maintaining fair, transparent and resilient capital markets,” he stated.

The discussions focused on a range of enforcement and cooperation matters, including mechanisms for enhancing cross-border information exchange, strengthening investigative collaboration among regulators, addressing increasingly sophisticated forms of securities fraud and market abuse, and promoting the effective implementation of international standards and best practices. Participants also exchanged experiences and insights on emerging enforcement challenges arising from technological developments, digitalization of financial services, and increasingly interconnected global markets.

IOSCO is recognized as the leading international body that brings together the world’s securities regulators and serves as the global standard setter for securities regulation. Through its policy work and cooperative initiatives, IOSCO plays a central role in promoting investor protection, ensuring that markets are fair, efficient and transparent, reducing systemic risk, and strengthening confidence in capital markets worldwide.

Sri Lanka has maintained a strong and active relationship with IOSCO for more than three decades. The SEC became an Ordinary Member of IOSCO in 1993 and has been a signatory to the IOSCO Multilateral Memorandum of Understanding (MMoU) since 2004. The MMoU is the internationally recognised benchmark for cooperation and information sharing among securities regulators and serves as a critical tool in facilitating cross-border investigations and enforcement actions.

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Pan Asia Bank partners Ideal Motors to offer leasing solutions

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Representatives of both parties are seen exchanging the agreement (Standing from left to right) Officials from Ideal motors: Trevene Ferdinand, AGM - Corporate/Tender; Dinesh Manage, Business Development Manager; Kasun Fernando, General Manager - Commercial Vehicles; Nimisha Welgama, Director – Legal and Corporate Affairs; Officials from Pan Asia Bank: Naleen Edirisinghe, Director/CEO; Yohan Ebell, Head of Retail Credit; Sudharshana Hettiarachchi, Officer in Charge – Leasing; and Kanchana Kannangara, National Sales Manager – Leasing.

Pan Asia Bank recently entered into a one-year Memorandum of Understanding (MOU) with Ideal Motors (Pvt) Ltd, creating a new financing avenue for customers purchasing vehicles from the authorised Mahindra dealer. The strategic partnership will enable customers of Ideal Motors to access leasing facilities from Pan Asia Bank, making vehicle financing more convenient while supporting their mobility and business requirements. The agreement also provides an opportunity for the Bank to expand its leasing portfolio and strengthen its presence in Sri Lanka’s vehicle financing market.

Ideal Motors is the authorised dealer for the Mahindra vehicle range in Sri Lanka, including the Mahindra Bolero CPU Truck and Scorpio Jeep/Pickup. The vehicles cater to a range of requirements, from commercial and business applications to personal mobility, making accessible financing an important part of the purchasing decision.

The Bank’s vehicle leasing facilities are designed to simplify the financing process, with convenient repayment options and professional support to help customers select a solution suited to their requirements. For customers, the arrangement brings vehicle selection and financing closer together, reducing the need to navigate the two processes separately.

“Our partnership with Ideal Motors enables us to bring financing closer to customers at the point of vehicle purchase. We remain focused on providing convenient and flexible leasing solutions that support both personal mobility and the needs of businesses,” said Naleen Edirisinghe, Director/CEO of Pan Asia Bank.

Pan Asia Bank and Ideal Motors will work closely during the one-year partnership to maximise business opportunities and deliver a seamless financing experience to customers. The collaboration is expected to strengthen both organisations’ ability to respond to demand for commercial and personal vehicles while creating greater value for customers.

Yohan Ebell, Head of Retail Credit, Pan Asia Bank, said: “Through this partnership, we aim to make vehicle financing simpler and more accessible, with leasing solutions designed to meet the varied requirements of Ideal Motors’ customers.”

The collaboration also reflects Pan Asia Bank’s commitment to building partnerships that make financial services more accessible and responsive to the needs of individuals and businesses.

Pan Asia Bank has established a growing presence in vehicle financing, offering leasing solutions designed around customer convenience and flexibility. Its leasing proposition is supported by a nationwide branch network and a customer-focused approach, enabling customers to obtain guidance on financing options while completing their vehicle purchase.

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Heritance Hotels and Resorts secures four wins at World Travel Awards 2026

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Heritance Hotels and Resorts has secured four distinguished titles at the World Travel Awards 2026, with three national awards recognising its Sri Lankan properties and an international title for Heritance Aarah in the Maldives.

The three Sri Lankan titles recognise Heritance Tea Factory as Sri Lanka’s Leading Heritage Hotel 2026, Heritance Ahungalla as Sri Lanka’s Leading Luxury Hotel 2026, and Heritance Kandalama as Sri Lanka’s Leading Wedding Hotel 2026. Heritance Aarah was named the Indian Ocean’s Leading All-Inclusive Resort 2026.

Internationally recognised within the global travel and tourism industry, the World Travel Awards celebrate excellence across hotels, resorts, and destinations. Recognition at this level affirms the quality, distinctiveness, and consistency of the experiences delivered by Heritance Hotels and Resorts.

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