June 30, Colombo (LNW): The grace period granted to small and medium-sized enterprises (SMEs) with substantial outstanding loans officially concludes today, bringing an end to the temporary suspension of certain debt recovery actions under the Parate Law.
According to the Central Bank of Sri Lanka (CBSL), this measure applied specifically to businesses with loan obligations exceeding Rs. 50 million, provided they had entered into active discussions with their respective lending institutions prior to March 31 this year.
The temporary relief allowed these enterprises time to restructure or negotiate repayment terms without immediate risk of asset seizure under the Parate legal framework.
The Parate Law enables banks to recover debts by auctioning mortgaged property without court proceedings—a mechanism often viewed as burdensome for struggling businesses during periods of financial hardship. The now-lapsed moratorium offered a brief buffer, particularly for larger SMEs hit by recent economic fluctuations.
However, not all relief measures are being lifted simultaneously. Enterprises with outstanding loans between Rs. 25 million and Rs. 50 million will continue to be protected under the same legal moratorium until September 30, giving them additional time to stabilise operations and finalise repayment arrangements.
