With the outbreak of the COVID-19 pandemic, the Central Bank of Sri Lanka (CBSL) has introduced several concessionary schemes since March 2020, to assist affected borrowers.
Such concessions include concessionary debt moratoriums, loan restructuring/rescheduling, suspension of recovery actions, low-cost working capital loans and waivers of fees and charges for certain banking transactions.
These concessions were provided to individuals including private sector employees and small and medium enterprises (SMEs) and other businesses engaged in tourism, transportation,manufacturing, services, agriculture, construction, apparel, IT, and related logistic services.
Accordingly, the last phase of the moratorium granted to COVID-19 affected borrowers ended on 31.12.2021, while the last phase of the moratorium granted to the tourism sector ended on 30.06.2022.
In the meantime, CBSL has required the licensed banks to set up post COVID-19 revival units in licensed banks in order to identify and assist under-performing and non-performing borrowers affected
by the pandemic for the purpose of reviving viable businesses with the potential of contributing to the national economic growth, thus facilitating the unwinding of moratorium in a sustainable manner.
Considering the current macroeconomic challenges and the requests made by several stakeholders including Government Institutions, CBSL has requested the licensed banks to provide appropriate concessions, for a period of six months, to borrowers..
These concessions are provided on a case-by-case basis depending on the future repayment capacity of the individuals and the viability of businesses/ projects.
a.: Borrowers can avail appropriate concessions (i.e., grace periods for capital or interest or both capital and interest or part of the capital or interest, restructuring of credit facilities, or any other concession) for a period of six months.
b. Borrowers can request for rescheduling of existing non-performing credit facilities over a longer period. Further,licensed banks are requested to suspend recovery actions against credit facilities classifieds non-performing after 01.01.2020. SME paddy millers are given further concessions
c. However, these concessions are not available for wilful defaulters, defaults due to diversion of funds, misuse of funds, mismanagement and/ or frauds and unviable projects.
d. Repayment plans: In the case of regular installment loans, the new installment amount should not exceed the contracted installment value of the existing loan. In the case of other credit facilities, the licensed bank and the borrowers should mutually agree on an appropriate repayment plan.
e.: In the case of Rupee credit facilities, the interest rate to be charged on the amount for the period of concessions, should not exceed the latest contracted rate of interest or the current Standing Lending Facility Rate (i.e., 15.5%), whichever is higher.
f. Requests have been made by borrowers to settle their credit facilities early, without paying any additional fee. In the case of lease facilities,recovery of future interest will also be waived off. Borrowers who intend to avail the early settlement options should make such a request to the bank on or before 30.09.2022.
