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CBSL requests financial institutions to offer lease concessions

16 Mar 2021

  • For a period of six months beginning 1 April 2021

  • Borrowers should make a request on or before 19 April

  Considering the difficulties and constraints faced by businesses and individuals engaged in passenger transportation services due to the ongoing Covid-19 pandemic, the Central Bank of Sri Lanka (CBSL) has requested licensed commercial banks, licensed specialised banks, licensed finance companies, and specialised leasing companies (financial institutions), to provide concessions for lease facilities obtained by such businesses and individuals for six months or a shorter period, as applicable, commencing from 1 April 2021. Issuing a statement, the CBSL yesterday (15) noted that the eligible borrowers are businesses and individuals engaged in providing public passenger transportation, private passenger transportation such as school transport service, office transport service, taxis including three-wheelers, etc. and those providing passenger transportation services to the tourism sector. “Such borrowers are required to make a request on or before 19 April 2021 in writing or through electronic means for deferring the lease instalments. Financial institutions are requested to accept any request submitted after 19 April 2021, if the reasons for delay in making such request is acceptable,” the CBSL added. It further noted that the concessions will be granted for performing lease facilities including lease facilities under moratorium as at 31 March 2021 obtained by eligible borrowers. According to the CBSL, financial institutions may charge an interest rate not exceeding the latest auction rate for 364-day Treasury Bills, available as at 1 April 2021, plus a margin for the deferred period, only on the lease instalments falling due during the deferred period. “With respect to licensed banks, this margin is specified as 1% per annum. With respect to licensed finance companies and specialised leasing companies, it is specified as 5.5% per annum and interest rates charged shall not exceed 11.5% per annum,” the regulator further noted. The CBSL emphasised that financial institutions are required to refrain from charging any penal interest on the lease facilities eligible for the concession. It added that during the deferred period of the existing lease facility, financial institutions will commence recovery of instalments falling due in relation to the moratoriums granted during 2019 and 2020. The statement added that this is taking into consideration that the public transportation is gradually returning to normalcy with the re-opening of schools, offices, airport, etc., the potential impact of the extended debt moratorium schemes on financial institutions, and the ongoing vaccination programme. The recovery of instalments of the lease facilities and moratoriums has been structured in a way that the borrowers are not overly burdened with repayment of instalments due to the debt moratoriums provided during the Covid-19 pandemic. “Financial institutions are requested to implement this concessionary scheme with a view to facilitating the eligible borrowers to carry on their income-generating activities and gradually commence repayment of their lease facilities. Eligible borrowers are requested to contact the respective financial institutions to obtain more information in this regard,” the Central Bank noted.


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