The Central Bank of Sri Lanka (CBSL) has directed licenced banks to establish Relief Banking Units to aid troubled Micro, Small, and Medium Enterprises (MSMEs), as outlined in Circular No. 01 of 2025. This is in addition to existing Business Revival Units mandated by a previous circular. The new units aim to provide effective implementation and monitoring of relief measures.
Banks can reschedule loans for eligible borrowers up to 10 years, contingent on repayment capacity and revival plans. Borrowers and banks must agree on terms, including interest rates, aligned with prevailing benchmarks. Disputes over auctioned property valuations must be addressed through transparent grievance mechanisms.
To enhance accountability, banks must report relief measures granted to borrowers monthly, starting 31 January 2025. The measures follow MSME complaints over perceived inadequacies in CBSL’s previous relief efforts and criticism of its response to the government’s loan freeze extension.
Deputy Minister Chathuranga Abeysinghe stated the relief targets loans under Rs. 25 million, covering 99% of debt-affected businesses. He emphasized the need for collective efforts from the government, banks, and businesses to overcome the debt crisis.
Key relief measures include:
Rescheduling non-performing loans classified after 1 April 2019, provided discussions with Business Revival Units begin by 31 March 2025.
Finalizing rescheduling agreements by 15 June 2025, with repayments starting between June and December 2025, based on loan size.
Waiving unpaid interest accrued between April 2019 and December 2024 for eligible borrowers.
Offering additional working capital loans and refraining from rejecting new loan applications solely due to adverse CRIB records.
Borrowers denied relief can appeal to the CBSL’s Financial Consumer Relations Department. Banks must provide detailed breakdowns of credit facilities upon request and collaborate with borrowers to ensure consistent application of relief measures. Borrowers are urged to engage with banks promptly to finalize repayment plans, as prolonged non-repayment may strain both parties.
These measures align with the National People’s Power (NPP) government’s election promise to establish a dedicated Relief Bank, aiming for sustainable economic recovery while addressing MSME concerns.
