• Maximum 2% interest margin allowed on loans below Rs. 50 m
• Relief measures include extended repayment periods and moratorium on legal action

The Central Bank of Sri Lanka (CBSL) will allow a maximum interest margin of 2% for restructured loans under Rs. 50 million as part of the relief provided for the affected small and medium enterprises (SMEs).

According to the relief measures provided by the government for the affected SMEs, the Finance Ministry said that it will provide 12 months for restructuring SME loans less than Rs. 25 million with the respective banks, nine months for loans between Rs. 25-50 million, and six months for loans over Rs. 50 million.

These restructured loans below the value of Rs. 50 million will have a reasonable interest rate subject to a maximum average weighted prime lending rate (AWPR) plus (+) reasonable margin which has a maximum limit of 2%.

Moreover, the Finance Ministry said that the maximum loan repayment period is 10 years (unless the original agreement has provided a period longer than 10 years) subject to a grievance handling process for aggrieved parties.

Also, it has asked the bank to suspend all legal actions for cases during the proposed relief 12 months period for loans less than Rs. 25 million, nine months for loans between Rs. 25-50 million and six months for loans above Rs. 50 million, including a complete freeze on legal proceedings related to non-performing loans (NPLs) in the relevant categories, other than dates already scheduled.

It has also instructed to rename the ‘Business Revival Units’ of the respective banks as the ‘Relief Banking Units’ and establish a transparent mechanism for grievance handling in the event of a dispute over the valuation for auctioning a property between banks and the defaulter which ensures the borrower’s property is auctioned at the highest possible rate to maximise its value.