Investors reduce its' lending to CBSL via SDF, where that money moved ?

After CBSL imposed restrictions on accessing the SDF window on a daily basis, banks tend to invest money on every Fridays at 14.50% and the rest of the days at 0.00% return. It is learned that banks with excess cash have started buying T-bills to maximize the return.

Earlier, it was expected that the banks with excess liquidity would refrain from investing in T-Bills or lending to other market participants. The deposits with CBSL-SDF were LKR 366Bn at the start of 2023 and now it has reduced to LKR 230Bn. This shows early signs of shifting liquidity from overnight to longer term G-sec.