The Central Bank of Sri Lanka has issued a circular requesting all licensed commercial banks and licensed specialised banks to provide temporary debt relief, fee waivers and access to new credit for individuals and businesses whose income or business has been directly affected by the recent cyclonic and flood disasters, subject to a borrower request submitted by 15 January 2026. Under the measures, banks may suspend capital and/or interest repayments on existing facilities for 3 to 6 months on a case-by-case basis, while capping interest during the suspension at the applicable contract rate and prohibiting interest on deferred interest. New loan facilities may be extended case-by-case, with repayment starting after a minimum grace period of three months beyond the end of any suspension period; loans up to two years are capped at a maximum fixed rate of 9% per annum or the borrower’s applicable contract rate for overdrafts or loan facilities as at the date of the circular, whichever is lower, while longer-tenor loans may move to an Average Weighted Prime Lending Rate-linked rate after two years. Banks must also suspend specified charges (including cheque return charges, stop payment charges, late payment fees, restructuring/modification fees and penal interest) on affected borrowers’ credit facilities up to 31 January 2026 and refund system-generated charges within three business days, provide pre-approval disclosures and obtain borrower consent for restructuring, and give written reasons for any rejection while noting the right to appeal to the Central Bank’s Financial Consumer Relations Department. The circular also addresses credit reporting and supervisory monitoring: banks must not decline new loan applications solely due to adverse Credit Information Bureau records and must agree a reporting modality with the Credit Information Bureau so that reported concessions do not adversely affect borrowers’ credit scoring or rating. Banks must report monthly, within 15 calendar days of each month-end starting from 31 December 2025, on relief granted and rejections to the Director of Bank Supervision, with the reporting format to be issued separately.
Central Bank of Sri Lanka 2025-12-05
Central Bank of Sri Lanka asks licensed banks to grant 3–6 month repayment suspensions and capped-rate new loans for cyclone and flood-affected borrowers
The Central Bank of Sri Lanka directs licensed banks to offer temporary debt relief, fee waivers, and new credit access to those affected by recent cyclonic and flood disasters, contingent on borrower requests by 15 January 2026. Measures include suspending repayments for 3 to 6 months, capping interest rates, and suspending specific charges until 31 January 2026. Banks must ensure credit reporting does not negatively impact borrowers and report monthly on relief measures and rejections to the Director of Bank Supervision.