Optimum Banking - Sri Lanka

CBSL extends concessions for Covid-19 affected businesses and individuals*

In light of the Covid-19 outbreak, CBSL has requested Licensed Commercial Banks (LCB’s) and Licensed Specialised Banks (LSB’s) to extend concessions towards affected parties.

1. Deferment or restructuring of existing credit facilities in the performing category

• Licensed Banks shall defer recovery of capital, interest or both of the existing performing (for one or more) credit facilities of borrowers affected by the pandemic up to 31st December 2021.

• Priority to be given towards accommodating requests for concessions made by borrowers in the Micro, Small and Medium Enterprises (MSME) sector.

• Banks may charge an interest rate not exceeding 6.93% (1-Yr T-Bill + 1%) on LKR facilities while banks may charge a concessionary interest rate on foreign currency loans.

2. Concessions for credit facilities in the non-performing category

• Licensed Banks may reschedule the existing non-performing loan (as at 1st September), on a case by case basis, over a long period considering the repayment capacity of the borrower and an acceptable revival plan.

• Licensed Banks may waive off penal interest accrued or charged during the period between April 1st 2020 to 1st September, provided such facilities are considered under the restructuring scheme.

• Licensed Banks shall suspend all types of recovery actions until 31st December 2021 against all credit facilities that have been classified as non-performing on or after April 1st 2021.

• Licensed Banks shall not levy excessive fees or charges in relation to granting concessions and shall inform such fees or charges to the borrower.

Source - CAL Research

Monetary Law Act Order No. 02 of 2021 on Maximum Interest Rates on Foreign Currency Deposits of Licensed Commercial Banks.

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