The Central Bank of Sri Lanka (CBSL) issued a circular to licensed banks, outlining relief measures for Small and Medium Enterprises (SMEs) adversely affected by the Easter Sunday attack, the COVID-19 pandemic, and the challenging macroeconomic conditions of recent years On December 19, 2024.
These measures, developed in agreement with the Sri Lanka Banks’ Association (Guarantee) Ltd. (SLBA) during discussions under the Working Committee on Recovery of Loans by Banks (Special Provisions) (Amendment) Act, No. 26 of 2024, aim to assist struggling SMEs.
The SLBA has emphasized that any suspension of Parate execution will be limited to March 31, 2025. The key aspects of the relief package include:
a. The relief measures apply only to SME credit facilities classified as Stage 3 (non-performing) from April 1, 2019, onwards. SMEs must engage with their bank’s Business Revival Units and submit necessary documents by March 31, 2025.
b. Rescheduling of impaired loans for eligible SMEs will depend on their repayment capacity and the presentation of an acceptable business revival plan.
c. Agreements on rescheduled loans must be finalized by June 15, 2025.
d. SMEs with outstanding credit below Rs. 25 million, between Rs. 25–50 million, and above Rs. 50 million as of December 15, 2024, must begin repaying rescheduled loans by December 31, 2025, September 30, 2025, and June 30, 2025, respectively.
e. Unpaid interest (excluding capitalized interest) from April 1, 2019, to December 15, 2024, may be waived.
f. Licensed banks are encouraged to provide additional relief, such as working capital facilities, based on borrowers’ repayment capacities and credible business revival plans.
g. New loan applications under this scheme should not be rejected solely due to adverse CRIB records.
h. In cases of disputes or rejections, banks must inform borrowers of the reasons and advise them on the appeal process to the Financial Consumer Relations Department at CBSL.
i. Borrowers can request a detailed breakdown of their capital, interest, and other charges from banks.
The CBSL has urged licensed banks and borrowers to collaborate effectively to ensure uniform implementation of these measures. Eligible borrowers are encouraged to approach their banks with the required documentation to negotiate repayment plans. Timely repayments, as agreed, are critical to preventing prolonged financial strain on both borrowers and banks.
