By: Staff Writer
December 02, Colombo (LNW): Sri Lanka’s private sector lending has shown a dramatic expansion from April to September 2025, with agriculture and personal loans emerging as the fastest-recovering segments after early-year contractions. Sectoral data from the Central Bank of Sri Lanka’s (CBSL) newly introduced Monthly Survey on Loans and Advances indicates a broadening of credit flows that could have far-reaching implications for the economy.
The survey tracks net changes in lending to four categories: agriculture and fishing, industry, services, and personal loans. Unlike total loan book figures, negative values indicate months when repayments outpaced new borrowing. Early in 2025, both agriculture and personal lending experienced net repayments. Agriculture posted Rs. 3 billion and Rs. 14 billion in May and June, translating to –2.1% and –6.3% of monthly credit. Personal loans mirrored the trend, with net repayments of Rs. 13 billion in April (–13.1%).
From July onwards, these sectors rebounded sharply. Agriculture saw net inflows of Rs. 31 billion in July and Rs. 35 billion in August, representing over 17% of monthly credit, before moderating slightly to Rs. 27 billion (11.7%) in September. Personal lending also surged, reaching Rs. 60 billion in June and 26% of total credit in September, reflecting improved household liquidity and growing small business borrowing.
Industry, as expected, remained the dominant credit recipient, with shares ranging from 24% in June to 45.6% in July, highlighting steady demand from production-linked sectors. Services lending was more volatile, peaking at 61.6% in April and falling to 19% in August, though it rebounded to 30.7% in September due to trade and transport-related borrowing.
Overall, total monthly private sector credit flows rose from Rs. 99 billion in April to Rs. 231 billion in September, setting new monthly highs alongside an annual growth of 22.1% in outstanding credit, which reached Rs. 9.52 trillion. CBSL Governor Dr. Nandalal Weerasinghe emphasized that the rapid expansion does not currently indicate overheating, though the concentration of growth in previously contracting sectors raises questions about sustainable risk management.
Economists warn that while the recovery in agriculture and household credit supports economic activity, unchecked lending could expose banks and borrowers to repayment pressures, particularly if macroeconomic conditions worsen. At the same time, the broader distribution of credit beyond industry and services may foster inclusive growth and bolster rural and household consumption, which are crucial for the economy’s resilience in 2025.
