Sri Lanka's central bank said on Saturday it would restrict commercial lenders' use of an overnight deposit facility to park excess liquidity and earn interest to a maximum of five times a month, pushing banks to instead utilise domestic money markets.

Some banks have shown an "over dependence on overnight facilities offered by the Central Bank, which are available to be used as fall back options after utilizing all other funding options," the Central Bank of Sri Lanka (CBSL) said in a statement.

The measure, to come into effect from Jan. 16, will support the revival of the domestic money market which has been largely inactive for the last few months, the CBSL said.

Sri Lanka is facing its worst economic crisis in seven decades, triggered by a plunge in its foreign exchange reserves that led to shortages of essentials and stoked public unrest.

(Reporting by Devjyot Ghoshal, Editing by Mark Potter)