MONETARY BOARDCENTRAL BANK OF SRI LANKA13 May 2020 BANKING ACT DIRECTION No. 03 of 2020RESTRICTIONS ON DISCRETIONARY PAYMENTS OF LICENSED BANKSThe Monetary Board of the Central Bank of Sri Lanka (CBSL), having considered the possible adverse impact on liquidity and other key performance indicators of licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks) due to the COVID-19 outbreak and the importance of maintaining appropriate levels of liquidity in licensed banks while managing cash flows prudently, hereby issues these Directions on restrictions on discretionary payments of licensed banks.1. Empowerment1.1 In terms of Sections 46(1) and 76J( 1) of the Banking Act No. 30 of 1988, as amended, in order to ensure the soundness of the banking system, the Monetary Board is empowered to issue Directions to all or any licensed bank, regarding the manner in which any aspect of the business of such bank or banks is to be conducted.2. Scope andPeriod ofApplication2.1 These Directions shall be applicable to licensed banks:(i) incorporated or established in Sri Lanka, and(ii) incorporated or established outside Sri Lanka.2.2 These Directions shall come in to effect immediately and be applicable until 31 December 2020.3. Restrictions on Discretionary Payments3.1 Licensed banks incorporated or established in Sri Lanka shall refrain from declaring cash dividends not already declared for financial year 2019 and any interim cash dividends for financial year 2020.3.2 Licensed commercial banks incorporated outside Sri Lanka shall refrain from repatriation of profits not already declared for financial years 2019 and 2020.1


l3 May 2020MONETARY BOARDCENTRAL BANK OF SRI LANKA BANKING ACT DIRECTIONSNo. 3 of 20203.3 Licensed banks shall refrain from buying-back its own shares.3.4 Licensed banks shall refrain from increasing management allowances and payments to Board of Directors.3.5 Licensed banks shall exercise prudence and refrain to the extent possible from incurring non-essential expenditure such as advertising, business promotions, sponsorships, travelling and training, etc..3.6 Licensed banks shall exercise extreme due diligence and prudence when incurring capital expenditure, if any.Prof. W D LakshmanChairman of the Monetary Board andGovernor of the Central Bank of Sri Lanka
2


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENTI 5 May 2020BANKING ACT DIRECTIONSNo. 04 of 2020LOAN TO VALUE RATIOS FOR CREDIT FACILITIES GRANTEDIN RESPECT OF MOTOR VEHICLESIssued under Sections 46(1) and 76(J)(1) of the Banking Act, No. 30 of 1988, as amended.The Central Bank of Sri Lanka issues Directions as follows for implementation of loan to value ratios in respect of credit facilities granted by licensed commercial banks (LCBs) and licensed specialised banks (LSBs), hereinafter referred to as licensed banks, for the purpose of purchase or utilisation of motor vehicles.1. The following will replace Directions 1 (i) of the Banking Act Directions No. 04 of 2019 on Loan to Value Ratios for Credit Facilities Granted in respect of Motor Vehicles.(i) Credit facilities granted by licensed banks for the purpose of purchase or utilisation of motor vehicles shall not exceed the following percentages of the market value of such vehicles.(a) In respect of unregistered vehicles and registered vehicles which have been usedin Sri Lanka for less than one year after the first registration;Table 1 - Loan to Value RatioVehicle CategoryVehicle Class of Department of Motor TrafficElectric VehiclesOtherCommercial vehiclesC1,C, CE,D1,D, DE,G1,G,J90%90%Motor Cars, SUVs and VansB (other than light trucks & single cabs)90%50%Locally Assembled Motor Cars, SUVs and VansB (other than light trucks & single cabs)90%70%Three wheelersBl90%25%Light trucksB90%90%Any other vehicleAl, A and single cabs categorized under B90%70%Hybrid Motor Cars, Vans and SUVsB (other than light trucks & single cabs)50%(b) 70 per cent in respect of registered vehicles which have been used in Sri Lanka for more than one year after the first registration.


CENTRAL BANK OF SRI LANKA BANK SUPERVISION DEPARTMENT15 May 2020BANKING ACT DIRECTIONSNo. 04 of 20202. Loan to Value Ratio for credit facilities granted for importation or purchase of motor vehicles under permits on concessionary terms shall be computed based on the proforma invoice value, instead of the market value of the motor vehicle.3. The Banking Act Directions No. 04 of 2019 dated 31.05.2019 on Loan to Value Ratios for Credit Facilities Granted in Respect of Motor Vehicles are withdrawn with effect from the date of this Directions.Prof. W D LakshmanChairman of the Monetary Board and Governor of the Central Bank of Sri Lanka


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT

    19 June  2020  BAN KING ACT DIRECTIONS           No. 05 of 2020

INVESTMENTS IN SRI LANKA INTERNATIONAL SOVEREIGN BONDS BY
LICENSED COMMERCIAL BANKS AND NATIONAL SAVINGS BANK

Issued i n terms of th e powers conferred by Section s 46(1) and 76(J)(1) of the Banking Act
No. 30 of 1988, as amended .

The Central Bank of Sri  Lanka with a view to easing the pressure on the exchange rate and the
stress on financial markets due to the impact of Covid -19 outbreak, requires licensed
commercial banks  and National Savings Bank  to suspend the purchase of Sri Lanka
International Sovereign Bonds  (ISBs ) for a period of three months unless such purchase of
ISBs is funded by using new foreign currency inflows to the banks .

These Directions shall be implemented with immediate effect .


MONETARY BOARD
  CENTRAL BANK OF SRI LANKA

    16 July 2020                           BANKING ACT  DIRECTION S                    No. 06 of 2020
1

EXTRAORDINARY REGULATORY MEASURES AMIDST COVID -19
The Central Bank of Sri Lanka  (CBSL) , considering the national importance of reviving business
sector s that w ere adversely affected by the COVID -19 and the exceptional circumstances of the
economic impact of COVID -19 pandemic,  has implemented a Credit Guarantee and Interest
Subsidy scheme under Phase III of Saubagya COVID 19 Renaissance Facility  and a liquidity
facility to construction sector  against  “Letter of Acceptance of Payments of Outstanding Bills to
Contractors ” issued by the Government  to settle dues to contractors by 31 December 2020 .

In this regard, t he Monetary Board, in terms of the powers conferred by Sections 21(1), 86, 46(1)
and 76J(1)  of the Banking Act No. 30 of 1988, as amended, has approved the following
extraordinary regulatory measures .

1. Empowerment under
the Banking Act

 1.1 In terms of Section  21(1) of the Banking Act, every licensed
commercial bank  shall maintain liquid assets in such amount as
may from time to time be determined by the Monetary Board
having regard to the nature of the business carried on by such
bank  provided that the percentage  determined by the Monetary
Board  shall  not be less than 20 per  cent and not more than 40
per cent.
1.2 In terms of Section 86 item (g) under Liquid Assets, the
Monetary Board is empowered to determine such other assets
as “liquid assets” .
1.3 In terms of Sections 46(l) and 76J(1) of the Banking Act, in
order to ensure the soundness of the banking system, the
Monetary Board is empowered to issue Directions to all or any
licensed commercial  banks and licensed specialised bank s,
hereinafter referred to as  licensed bank s, regarding the manner


hereinafter referred to as  licensed bank s, regarding the manner
in which any aspect of the business of such bank or banks is to
be conducted.
2. Liquid Assets  for
Computation of
Statutory Liquid
Assets Ratio    2.1 Licensed commercial banks shall consider  the new  credit
facilities granted to the construction sector against  “Letter of
Acceptance of Payments  of Outstanding Bills to Contractors ”
issued by the Government  as referred  to in the Operating


MONETARY BOARD
  CENTRAL BANK OF SRI LANKA

    16 July 2020                           BANKING ACT  DIRECTION S                    No. 06 of 2020
2

  Instructions No. 35/03/023/0001/002 or any other subsequent
amendments issued by the Domestic Operations Department  of
CBSL , as liquid asset s for the purpose of computation of
Statutory Liquid Assets Ratio (SLAR),  until 31 December
2020 , subject to a haircut of 10%  of such credit facilities .
3. Classification of
Loans and
Advances, Income
Recognition and
Provisioning
  3.1 In terms of Banking Act Directions No. 03 of 2008 on
Classification of Loans and Advances, Income Recognition
and Provisioning  and any subsequent amendments, l icensed
commercial  banks are permitted to  initially classify the new
credit facilities granted  to the construction sector against
“Letter of Acceptance of Payments of Outstanding Bills to
Contractors ” issued by the Government,  as performing loans
without considering the current  classification status of other
existing facilities , provided that the new facility is granted for
the purpose of new economic activities.
3.2 Licensed commercial  banks shall ensure compliance with all
other requirements relating to c lassification of loans and
advances, in case of subsequent default or potential risk  of such
borrowers .
4. Computation of
Capital Adequacy
Ratio    4.1 In terms of Part III (C) of the Banking Act Directions No. 01 of
2016 on Capital Requirements under Basel III for Licensed
Banks,  the following will qualify as acceptable credit risk
mitigant s for credit facilities granted against the same and shall
be risk weighted at zero per cent
(i) The “Letter of Acceptance of Payment of Outstanding
Bills due to Contractors ” issued by the Government .
(ii) The Credit Guarantee provided under Phase III of
Saubagya COVID -19 Renaissance Facility .


MONETARY BOARD
  CENTRAL BANK OF SRI LANKA

   16 July 2020                           BANKING ACT  DIRECTION S                    No. 07 of 2020

AMENDMENTS TO BANKING ACT DIRECTIONS NO. 01 OF 2016 ON CAPITAL
REQUIREMENTS UNDER BASEL III FOR LICENSED COMMERCIAL BANKS AND
LICENSED SPECIALISED BANKS

In terms of powers conferred by Sections l9(7 )(a) and 76G(7) of the Banking Act No. 30 of  1988,
the Monetary Board is empowered to  determine the minimum capital ratios for licensed
commercial  banks and licensed specialised banks , hereinafter referred to as  licensed bank s.

Accordingly, Section d) i) II of web-based return code 20.3.1.8.1.0  referred  to in Part III (A) of the
Banking Act Directions No. 01 of 2016 on Capital Requirements under Basel III for Licensed
Banks is amended as follows:

The annual turnover of the SME shal l not exceed Rs. 1 billion


CENTRAL BANK O F SRI LANKA
BANK SUPERVISION DEPARTMENT

14 February 2020           FREQUENTLY ASKED QUESTIONS (FAQs)         No. 01 of 20 20

Last updated on 15 June  2020

Banking Act Directions No. 04 of 2018 on Financial Derivative Transactions for
Licensed Commercial Banks a nd Licensed Specialised Banks

1) Is an underlying transaction (a current transaction or a permitted capital transaction
in terms of the Foreign Exchange Act and the Regulations issued thereunder)
required when a licensed commercial bank or a licensed specialized bank in Sri
Lanka (i.e. Eligible Bank as defined in the said Direc tion) is entering into a
derivative transaction with a foreign counterparty?

Yes, a valid underlying transaction is necessary when a n Eligible Bank  enter s
into a derivative transaction with any counterparty in Sri Lanka or abroad
other than an inter -bank transaction.

2) Are derivative transactions which Eligible Banks are permitted to enter into with
foreign counterparties limited to End User Deals (as described in paragraph 5.1 (a)
of the said Direction) and hedging on back -to-back basis of its Non -Market  Maker
(NMM) Deals with its local customers and other Eligible Banks  (as described in
paragraph 5.1 (b) of the said Direction)?

End User Deals and Non-Market  Maker Deals can be entered into with
foreign counterparties. However, Derivative Market Maker Deals are not
permitted to enter into with foreign counterparties.

3) What is the position with respect to transfers of cash and securities under a Credit
Support Annex? Are Eligible Banks permitted to make such transfers to a foreign
counterparty without a specific regulatory approval?


CENTRAL BANK O F SRI LANKA
BANK SUPERVISION DEPARTMENT

14 February 2020           FREQUENTLY ASKED QUESTIONS (FAQs)         No. 01 of 20 20

Last updated on 15 June  2020
The Direction requires to sign ISDA agreement with the counterparty.  CSA is
part of the ISDA agreement and a CSA cannot be executed without an ISDA .
Accordingly, if both part ies want to sign CSA they should enter into ISDA .
However , if both part ies agree, they can refrain from signing an ISD A.
Specific regulatory approval is not required  for the transfer of cash and
securities under CSA.

4) Paragraph 6.3 of the said Direction prohibits Eligible Bank to make an upfront
payment  other than option premiums , to a customer  in relation to a derivati ve
transaction . Does this prohibition apply to upfront payments by an Eligible Bank
entering into a derivative transaction with a foreign counterparty?

Direction 6.3 equally applies to derivative transaction s with a foreign
counterparty as well.

5) Can a b ank extend or unwind and re -book a FX forward contract at the historical
rate (i.e., originally contracted rate)?

In terms of the Direction 5.7 of Banking Act Directions No. 04 of 2018 on
Financial Derivative Transactions, unwinding and re -booking of der ivative
contracts shall be done as follows:
• Parties may unwind/sell back a derivative partially or fully, if such
derivative is no longer required.
• All derivative contracts once unwound are eligible to be rebooked
subject to the terms specified in the cited Directions.
• In the case of unwinding a derivative contract before maturity while the
underlying transaction still exists, marked -to-market loss should be
charged to such customer.


CENTRAL BANK O F SRI LANKA
BANK SUPERVISION DEPARTMENT

14 February 2020           FREQUENTLY ASKED QUESTIONS (FAQs)         No. 01 of 20 20

Last updated on 15 June  2020
• Any marked -to-market gain (financial gain) should not be paid to the
customer.
• However, the rate benefit may be passed on to the customer at the time
of rebooking.

In terms of Direction 4.1 (xii) of Banking Act Directions No. 03 of 2009 on
Risk Manageme nt Relating Foreign Exchange Businesses, FX transactions
should be executed at current market rates and off-market or historical rate
rollovers are not permitted.

However, under the prevailing COVID -19 business environment, customers
may not be in a posit ion to absorb FX losses due to their inability to deliver
the FX forward contracts at maturity. Therefore, licensed banks may extend
the FX forward contracts as at 19.03.2020 , as and when maturi ng, at the
contracted rate after adjusting the forward premium  applicable for the
extended period. However, banks should take the necessary steps to
verify  that the customer is genuinely unable to deliver the forward contract
on the due date, due to the current global pandemic.

6) Can the marked -to-market gain (financ ial gain) be paid to the customer, in the case
of unwinding and rebooking of a derivative  transaction ?

In terms of the Direction 5.7 of Banking Act Directions No. 04 of 2018 on
Financial Derivative Transactions, unwinding and re -booking of derivative
contracts shall be done as follows:
• Parties may unwind/sell back a derivative partially or fully, if such
derivative is no longer required.


CENTRAL BANK O F SRI LANKA
BANK SUPERVISION DEPARTMENT

14 February 2020           FREQUENTLY ASKED QUESTIONS (FAQs)         No. 01 of 20 20

Last updated on 15 June  2020
• All derivative contracts once unwound are eligible to be rebooked
subject to the terms specified in the cited Directions.
• In the case of unwinding a derivative contract before maturity while the
underlying transaction still exists, marked -to-market loss should be
charged to such customer.
• Any marked -to-market gain (financial gain) should not be paid to the
custome r.
• The rate benefit may be passed on to the customer at the time of
rebooking.

However, considering the importance to retain foreign investors in
Government securities, banks  may pay the marked -to-market gain arising
from unwinding/ selling back of derivatives for which the underlying
transaction is an investment in Government Securities, by foreign investors .

***********************************************


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

1

Frequently Asked Questions
Circular Nos. 04, 05 and 06 of 2020 on Concessions granted to
COVID -19 Hit Businesses including Self -Employment and Individuals,
the Letter Dated 27.03.2020 on Extraordinary Regulatory Measures, and
the Monetary Law Act Order No. 1 of 2020 on Maximum Interest Rates on Pawning
Advances of Licensed Banks

1. Who are the eligible individuals under the COVID -19 relief scheme?
 Self-employed individuals and other individuals who have lost their jobs or income due to the
outbreak of COVID -19.
 Foreign currency earners (who have to repay loans in foreign currency) whose incomes/
businesses have been adversely affected due to the outbreak of COVID -19.

2. What are the businesses/sectors eligible for the COVID -19 reliefs?
 Tourism, direct and indirect export -related businesses including apparel, IT, tea,  spices,
plantation and related logistic suppliers that have been adversely affected by work disruption
and overseas lockdowns resulting from COVID – 19. There is no turnover limit stipulated for
these businesses/sectors to avail of the concessions.
 Small and Medium Enterprises (SMEs) engaged in business sectors such as manufacturing,
services, agriculture (including processing), construction, value addition and trading
businesses including authorised domestic pharmaceutical suppliers with turnover below Rs . 1
bn (for this purpose annual turnover is considered based on the latest available accounts or
estimates).
 Foreign currency earning corporates who have to repay loans in foreign currency and whose
incomes/ businesses have been adversely affected due to the outbreak of COVID -19. Please note that these ‘Frequently Asked Questions (FAQs)’ have been compiled ba sed on


regulations issued by the Central Bank of Sri Lanka up to 06.05.2020 and the responses herein
are subject to changes based on future regulations and/or amendments, if any, relating to the
concessions granted to individuals and businesses affected by  COVID -19.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

2

3. What is meant by ‘Debt Moratorium’?
 Debt moratorium refers to the deferment of capital and/or interest payments which fall due
within the respective concession periods.
 However, debt moratorium does not mean a waive -off of capit al and/or interest permanently.
The customer should pay the capital and/or interest payments which fall due within the
concession periods at a later date according to the revised repayment plan.

4. From whom can I get these reliefs?
All licensed commercial banks, licensed specialized banks, licensed finance companies and
specialized leasing companies that are regulated by the Central Bank of Sri Lanka will be offering
these reliefs.

5. Can’t I get a relief for loans obtained from Rural Banks, SANASA Banks and Co-operative
Banks/Societies?
 Only the licensed commercial banks, licensed specialized banks, licensed finance companies
and specialized leasing companies regulated by the Central Bank of Sri Lanka will be offering
these reliefs.
 SANASA Development Bank PL C (A licensed specialized bank) is the only SANASA Bank
regulated by the Central Bank of Sri Lanka.

6. What types of credit facilities are eligible for reliefs under this scheme?
Term loans, leasing facilities, pawning, overdrafts and trade finance facilities denominated in
Rupees and foreign currency subject to the requirements specified in Circular Nos. 4, 5 & 6 of
2020 issued by the Central Bank of Sri Lanka upon a request made by the eligible borrowers on
or before 15.05.2020.

7. Are cash backed fa cilities and housing loans excluded from reliefs?


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

3

No. The type of collateral has not been considered when offering the reliefs. So cash backed
facilities and housing loan facilities too can be offered the relief.

8. What is the effective date for these rel iefs?
The loan installments and/or lease rentals that fell due on or after 25.03.2020.

9. Do I have to submit a request to avail these reliefs? If so, How?
 Yes. The customer is expected to submit a request on or before 15.05.2020 through online
facilities or  other communication arrangements including -mail/SMS/WhatsApp, etc. with
minimum basic information such as customer name, national identity card/business
registration number, loan reference/account number that would facilitate the financial
institutions to  provide such reliefs.
 However, wherever possible, financial institutions would grant concessions to eligible
borrowers without a request being made by the borrower (e.g., loans to individuals, overdrafts,
trade finance, pawning, credit cards, etc).

10. What if I am in a rural area with no access to communication facilities and I cannot make a
written application?
 Wherever possible, financial institutions would grant concessions to eligible borrowers
without a request being made by the borrower.
 However, if yo u can make a request through a suitable method with the minimum basic
information such as customer name, national identity card/business registration number, loan
reference/account number on or before 15.05.2020, it would help the financial institution to
expedite granting the relief package.
 Majority of the banks advertise dedicated phone numbers on their websites, social media and
TV. So, you can call the respective financial institution and make further inquiries in this
regard.


regard.

11. Why can’t the financial institutions grant these reliefs without any request?


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

4

 Wherever possible, financial institutions would grant concessions to eligible borrowers
without a request being made by the borrower.
 However, financial institutions serve a large number of customers and loan recoveries are
handled through automated systems.
 So, when an eligible customer makes a request, it helps the financial institution to separate
these customers and to manually effect the concessions in the systems.

12. How will I know if I have been granted the concession, upon request?
 The financial institutions are required to complete processing of customer requests within 45
days from the date of receipt of the request.
 Until the processing of requests is concluded, recovery of loans from the resp ective applicants
is to be suspended.
 Hence the financial institutions will notify the outcome of the requests within this 45 day time -
period.

13. What about the credit facilities which remained overdue (in arrears) prior to the effective
date of the scheme?
 Concession will be granted for the loan installments/lease rentals that fall due on or after
25.03.2020.
 However, if the credit facility remains in performing category with an arrears/overdue
position , the customer may request the financial institution to cover that arrears within the
applicable moratorium period. In this case the future moratorium period will reduce by the
arrears/overdue period.
 For example, if loan installments for February and Mar ch 2020 remained in arrears for a
performing loan which is eligible to get a 6 months moratorium period starting from April
2020, the customer may request the financial institution to back date such moratorium period
to start from February 2020. In this ca se, the six months will be counted from February 2020
and not from April 2020.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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 Further, in this case the customer should make a request for such adjustment and negotiate
with the financial institution.
 Otherwise, since loan deductions are automated, finan cial institutions may recover any
overdue up to 25.03.2020, as soon as money is deposited to a customer’s account.
 If the credit facilities were in the non -performing category as at 25.03.2020 , a debt moratorium
will be granted until 30.09.2020.  Customer s who belong to the eligible businesses defined
under the relief scheme can request the financial institution to reschedule their remaining
capital installments along with existing and future interest due, and the repayment of the
rescheduled loan will com mence on or after 01.10.2020.
 Depending on the already settled portion of the existing non -performing loan, if the borrower
settles all future interest and installments, 25% or 50% of the arrears interest will be waived.

14. Can I apply for a concession witho ut settling the existing arrears?
Yes, an application can be made even if there is an overdue.

15. Why has the financial institution deducted my loan installments even though I am eligible
for the concessions?
 The financial institution may have deducted the loan installment unintentionally, since loan
deductions are generally handled through automated systems. Financial institutions will have
to be given a reasonable time period, (preferably before 15.05.2020) to manually effect the
refunds.
 If installments h ave been already deducted from credit facilities which are granted a
concession, they will be reversed and refunded through credits to the customer’s accounts.

16. Why has the financial institution deducted my loan installments even when non -eligible
borrower s have been given a concession up to 60 days?


borrower s have been given a concession up to 60 days?
 The financial institution may have deducted the loan installment unintentionally, since loan
deductions are generally handled through automated systems. Financial institutions will have
to be given a reasonable  time period (preferably before 15.05.2020) to manually effect the
refunds.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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 Even for borrowers who are not entitled to any other concessions under this scheme, since an
additional 60 -day period to settle loans and advances that become due for settlement du ring
the 60 days period commencing from 01.04.2020 has been granted, refunds will be made for
deductions done during such period.

17. What if my facilities remained in non -performing? Am I not eligible for any concession?
 Even if your facilities remained in n on-performing, you will be given concessions if you
belong to one of the eligible categories
 The following concessions will be granted only to eligible businesses (i.e., Tourism, direct
and indirect export -related businesses including apparel, IT, tea, spi ces, plantation and related
logistic suppliers that have been adversely affected by work disruption and overseas
lockdowns resulting from COVID – 19 and Small and Medium Enterprises engaged in
business sectors such as manufacturing, services, agriculture ( including processing),
construction, value addition and trading businesses including authorised domestic
pharmaceutical suppliers):
o The penal interest charged up to 25.03.2020 shall be waived off by the concerned financial
institutions.
o A moratorium up to 30.09.2020 will be granted.
o The balance capital outstanding and balance portion of interest of the defaulted
installments and the future interest can be rescheduled over a 3 year period. However, if
the original maturity period is over 3 years, financial i nstitutions can reschedule such
facilities to be recovered over an equal maturity period.
o Accordingly, if you request the financial institution to grant a moratorium against your
existing non -performing credit facility, the financial institution will grant  a moratorium up


existing non -performing credit facility, the financial institution will grant  a moratorium up
to 30.09.2020 and reschedule the loan so that this new rescheduled loan will have to be
paid off within 3 years (or an agreed longer period for facilities with an original maturity
of more than 3 years), commencing from 01.10.2020.
o Further, if you fully repay this rescheduled loan within these 3 years or the agreed longer
period, you can obtain a waiver for the interest installments deferred up to 30.09.2020.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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o Depending on the already settled portion of the existing non -performing loa n, if the
borrower settles all future interest and installments, 25% or 50% of the arrears interest will
be waived.

18. Will the financial institutions refund the installments they deducted from me? If so, under
what conditions and by when?
 Yes. If installmen ts have been already deducted from credit facilities which are granted a
concession, they will be reversed and refunded through credits to the customer’s accounts.
 Even for borrowers who are not entitled to any other concessions under this scheme, since an
additional 60 -day period to settle loans and advances that become due for settlement during
the 60 days period commencing from 01.04.2020 has been granted, refunds will be made for
deductions done during such period.
 Since loan deductions are generally ha ndled through automated systems, financial institutions
will have to be given a reasonable time period (preferably before 15.05.2020) to manually
effect the refunds.

19. What if we are not an eligible business/individual but we don’t have any source to repay
loans taken from the financial institutions?
All borrowers who are not entitled to any concessions  included in the Circulars can avail of an
additional 60 -day period to settle loans and advances that become due for settlement during the
60 days period commencing from 01.04.2020.

20. What will happen to the interest component during the concession/moratorium period?
Payment of installments (interest + capital) is not requi red until the end of the moratorium period.
However, when the moratorium period ends, customers will have to start making payments as
agreed before the concessions were offered. No additional in terest will be charged by licensed


agreed before the concessions were offered. No additional in terest will be charged by licensed
banks from customers, on th e deferred capital and/or interest installments.

21. Will the bank recover the capital and interest installments that are applicable for the
moratorium period from the customers in future? If so how?


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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 Yes. As per the Circulars, the respective moratoriums only give customers the ability to  defer
the repayment of capital and interest.  As such, the moratorium does not require the licensed
banks to waive -off the capital and/or interest installments. For example, the moratorium will
work as follows:
Example
Loan grant date 01.04.2019
Loan amount Rs. 2,000,000
Loan Term (original) 24 months
Interest Rate 16%
Monthly installment value (derived) = Rs. 97,926
   Remaining no. of monthly installments as of end March 2020 = 12

o If a customer eligible for a 6 months deb t moratorium from April 2020, then that customer
will now not be required to pay installments to the bank from April 2020 to September
2020.
o However , this customer will be required to pay monthly installments of Rs. 97,926 from
October 2020 to the initiall y agreed date of March 2021 and for additional six months until
September 2021.
o Basically, original repayment schedule will be extended by an equal period of time to the
moratorium with the same installment value to be paid by the customers.

22. If I need to stop my cheque payments, how can I do it and is there any charge?
You can request your respective licensed bank to effect stop payments on the cheques drawn. All
financial institutions have been told not to charge for stop payments during the period up to
30.09.2020.

23. Will I be charged any penal charges or late payment fees for credit facilities, whether I am
eligible or not for concessions?
 All financial institutions have been told not to charge for cheque  returns, stop payments, late
payment fees on all credit cards and other credit facilities during the period up to 30.09.2020.


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 No additional interest will be charged on the capital and/or interest installments that are
deferred under the concessions grante d.

24. What would happen to lease facilities that are serviced solely from business income but the
leased vehicle is not listed in the circulars?
 A six -month debt moratorium is granted on leasing rentals only to self -employed individuals
and individuals who own three wheelers, school vans, lorries, small goods transport vehicles
and buses, and related assets such as motor bikes and taxies used for b usiness purposes (not
for personal use).
 So if the leased vehicle does not fall into the above category and is also for personal use, you
can avail of an additional 60 -day period to settle loans and advances that become due for
settlement during the 60  days period commencing from 01.04.2020, which is granted for all
other borrowers that are not entitled to any other concessions  included in the Circulars.

25. I am having a business but my turnover is Rs. 1.2 billion, what are the reliefs applicable to
me?
 This will depend on the sector to which your business belongs.
 There is no turnover limit given for businesses/sectors under tourism, direct and indirect
export -related businesses including apparel, IT, tea, spices, plantation and related logistic
suppliers  that have been adversely affected by work disruption and overseas lockdowns
resulting from COVID – 19.
 If your business does not belong to any of these sectors and is not eligible for any
concessions  included in the Circulars, still you can avail of an ad ditional 60 -day period to
settle loans and advances that become due for settlement during the 60 days period
commencing from 01.04.2020.


commencing from 01.04.2020.

26. I have a textile business with turnover of Rs. 2 million per month but I do not have accounts
to show. However, I main tain a current account with Bank ABC. I have stocks in my shop
and my business will be closed indefinitely due to this situation and my wife and children do
not have any other means of living. What are the reliefs available to me from this scheme?


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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 The sche me provides a six -month debt moratorium for affected businesses in the apparel
sector irrespective of the turnover, which will be applicable for loans obtained in the name of
your business.
 Also, a six -month debt moratorium is granted on the leasing rental s only to self -employed
individuals and individuals who own three wheelers, school vans, lorries, small goods
transport vehicles and buses, and related assets such as motor bikes and taxies used for
business purposes.
 All overdrafts, trade finance and pawn ing facilities that are falling due for settlement or
maturing or are under review during the period up to 30.09.2020 have been extended up to
30.09.2020.
 Further, a three -month debt moratorium for all personal loans and leasing rentals has been
granted to  eligible individuals and this includes all credit facilities such as housing loans,
consumptions loans, cash backed loans, leasing facilities, etc., provided that the granted
amount is Rs. 1 million or less.
 If the credit facilities obtained by you aren’t  eligible for any of these concessions  included in
the Circulars, still you can avail of an additional 60 -day period to settle loans and advances
that become due for settlement during the 60 days period commencing from 01.04.2020.
 Additionally, the validit y period of cheques valued less than Rs. 500,000, has been extended
until 15.05.2020, provided that such cheques have become stale or are to expire in March and
April 2020.
 Further, all financial institutions have been told not to charge for cheque returns , stop
payments, late payment fees on all credit cards and other credit facilities during the period up
to 30.09.2020.No additional interest will be charged on the capital and/or interest installments


to 30.09.2020.No additional interest will be charged on the capital and/or interest installments
deferred under the concessions granted.

27. I have a small business and employ 6 girls who are engaged in making selected garment
items and I also run a sales outlet. The Sales outlet has 3 employees, a vehicle and a driver.
I still have to pay their salaries, rental for the shop and work place and leasing installment
for the vehicle which is Rs. 225,000 per month. I have obtained a bank loan of Rs. 10 million


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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with capital and interest to be paid monthly. What are the reliefs available to me from this
scheme?
 The scheme provides a six -month debt mora torium for affected businesses in the apparel sector
irrespective of the turnover, which will be applicable for loans obtained in the name of your
business.
 Also, a six -month debt moratorium is granted on the leasing rentals only to self -employed
individua ls and individuals who own three wheelers, school vans, lorries, small goods transport
vehicles and buses, and related assets such as motor bikes and taxies used for business purposes.
 All overdrafts, trade finance and pawning facilities that are falling d ue for settlement or
maturing or are under review during the period up to 30.09.2020 have been extended up to
30.09.2020.
 Further, a three -month debt moratorium for all personal loans and leasing rentals has been
granted to eligible individuals and this in cludes all credit facilities such as housing loans,
consumptions loans, cash backed loans, leasing facilities, etc., provided that the granted amount
is Rs. 1 million or less.
 If the credit facilities obtained by you aren’t eligible for any of these conces sions  included in
the Circulars, still you can avail of an additional 60 -day period to settle loans and advances that
become due for settlement during the 60 days period commencing from 01.04.2020.
 Additionally, the validity period of cheques valued less t han Rs. 500,000, has been extended
until 15.05.2020, provided that such cheques have become stale or are to expire in March and
April 2020.
 Further, all financial institutions have been told not to charge for cheque returns, stop payments,
late payment fee s on all credit cards and other credit facilities during the period up to


late payment fee s on all credit cards and other credit facilities during the period up to
30.09.2020. No additional interest will be charged on the capital and/or interest installments
deferred under the concessions granted.

28. What are the concessions available for Overdra fts?
 Permanent Overdraft facilities falling due for settlement or maturing or are reviewed during
the period up to 30.09.2020 have been extended up to 30.09.2020.


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BANK SUPERVISION DEPARTME NT

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 However, in the case of Temporary Overdraft facilities as at 25.03.2020, the expiry shall be
extended by two months for eligible borrowers.
 Interest rate on such facilities will be capped at 13 percent during the extended period.
 Borrowers are not required to service interest during the moratorium period. However, any
borrower who wishes to pay interest on overdrafts, can do so.

29. What are the concessions available for trade finance facilities?
 Eligible trade finance facilities falling due for settlement or maturing or were under review
during the period up to 30.09.2020 have been extended up to 3 0.09.2020.
 These include import facilities  for pharmaceutical drugs, medical equipment, food, fertilizer
and essential raw materials and machinery &equipment and export facilities  granted to
tourism, direct and indirect export -related businesses including apparel, IT, tea, spices,
plantation and related logistic suppliers that have been adversely affected by work disruption
and overseas lockdowns resulting from COVID – 19.

30. What  are the concessions available for pawning facilities?
 Pawning facilities falling due for settlement or maturing during the period up to 30.09.2020
have been extended up to 30.09.2020.
 For all new pawning advances and existing pawning facilities that becom e due for renewal on
or after 27.04.2020, where the money has been lent on the security of personal articles made
of gold accepted as a pledge for pawning, the maximum interest rate chargeable by licensed
banks is limited to 12% per annum or 1% per month i f the pawning period is less than one
year.

31. Are only personal loans eligible for these concessions?
No. Term loans, leasing facilities, pawning, overdrafts and trade finance facilities denominated in


Rupees and foreign currency are the eligible credit fac ilities subject to the requirements specified
in Circular Nos. 4 & 5 of 2020 issued by the Central Bank of Sri Lanka.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

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32. What are the concessions available for customers who have obtained housing loans?
 A three -month debt moratorium provided that the granted  amount is Rs. 1 million or less.
 Since housing loans granted in excess of Rs. 1 mn are not entitled to any concessions  included
in the Circulars, such customer can only avail of an additional 60 -day period to settle loans
and advances that become due for settlement during the 60 days period commencing from
01.04.2020.

33. How many housing loan installments can I save?
 A three -month debt moratorium has been granted for housing loans provided that the granted
amount is Rs. 1 million or less.
 Since housing loans  granted in excess of Rs. 1 mn are not entitled to any concessions  included
in the Circulars, such customer can only avail of an additional 60 -day period to settle loans
and advances that become due for settlement during the 60 days period commencing from
01.04.2020. So, during the eligible moratorium period you can stop paying your housing loan
installments but you will have to eventually pay them once repayment starts at the end of the
moratorium period.

34. What are the concessions granted to private sector  non-executive employees?
 A debt moratorium has been granted until 30.05.2020 on personal loans granted to all private
sector non -executive employees and there is no limit on the value of these personal loans.
 However, financial institutions will decide o n whether the borrower is a ‘non -executive
employee’ based on the hierarchical designation of the borrower or by obtaining a
confirmation from the employer.

35. What are the concessions granted to Government sector employees?
 A three -month debt moratorium for  all personal loans and leasing rentals of value less than
Rs. 1 million.


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BANK SUPERVISION DEPARTME NT

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 This includes all credit facilities granted to Government sector employees, including housing
loans, consumptions loans, cash backed loans, leasing facilities etc., provided that the  granted
amount is Rs. 1 million or less.
 For all other credit facilities obtained by Government sector employees, which are not entitled
to any other concessions  included in the Circulars, they can only avail of an additional 60 -day
period to settle loans  and advances that become due for settlement during the 60 days period
commencing from 01.04.2020.

36. What are the concessions granted to pensioners?
 A three -month debt moratorium for all personal loans and leasing rentals of value less than
Rs. 1 million.
 This includes all credit facilities granted pensioners, including housing loans, consumptions
loans, cash backed loans, leasing facilities etc., provided that the granted amount is Rs. 1
million or less.
 For all other credit facilities obtained by pensioner s, if not entitled to any concessions  included
in the Circulars, can avail only an additional 60 -day period to settle loans and advances that
become due for settlement during the 60 days period commencing from 01.04.2020.

37. Are the pensioners and/or gove rnment -sector employees who have borrowed in excess of
Rs. 1mn eligible for the concessions/ moratoriums?
Yes. An additional 60 -day period has been granted to settle loans and advances that become due
for settlement during the 60 days period commencing from 01.04.2020.

38. What requirements do we have to fulfill to obtain the working capital loan and/or
investment purpose loan and what are the characteristics of such loans?
 Financial institutions may grant an additional loan or a new loan facility in Rupees for working


 Financial institutions may grant an additional loan or a new loan facility in Rupees for working
capital or investment purposes subject to the following conditions, provided that the b orrower
submits a credible business plan.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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 The working capital loan will be granted under the Saubhagya (Prosperity) Loan Scheme as a
‘Saubhagya COVID 19 Renaissance Facility’ only to micro, small and medium sized
businesses including manufacturing, service s, agriculture, construction, self -employment
businesses and individuals and the businesses in the sectors of tourism, exports and related
logistics suppliers.
 One borrower (business) is eligible for only one loan even when the borrower has credit
faciliti es in several financial institutions. Financial institutions granting this facility will be
obtaining a written confirmation from the customer that the customer has not approached other
financial institutions for loans under the same Scheme.
 The respectiv e financial institution will assess the true eligibility of the borrower based on the
bank accounts maintained (including foreign currency accounts) and collateral provided.
 The maximum loan amount herein is to be the two months working capital requirement  of the
business concerned. So the respective financial institution will properly evaluate the working
capital requirement of the borrower and agree on the loan size, limiting it to cover only the
obligatory expenses (such as salaries/wages) to be incurred  during the 2 -month period. If the
business is non -operational, usual components of working capital such as raw material will be
excluded when computing the two months working capital requirement.
 The financial institution may request for suitable collater al, when providing the working
capital/investment purpose loan depending on the customer risk profile and past track record.
 Accordingly, financial institutions would grant a working capital purpose loan facility to


 Accordingly, financial institutions would grant a working capital purpose loan facility to
eligible performing and non -performing b orrowers in Rupees (no foreign currency facility)
not exceeding 2 months’ working capital requirement and such loan shall be repaid over two
years at an interest rate equal to 4% p.a.
 The investment purpose loan facility shall be granted only by licensed b anks and only for
performing borrowers in Rupees not exceeding Rs. 300 mn per bank per borrower to expand
business activities. Such loan shall be repaid over five years at an interest rate equal to
maximum of AWPLR plus 1.5% p.a.
 A moratorium for a period 25.03.2020 to 30.09.2020 will be granted for both working capital
loans and investment purpose loans.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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39. What can I do if the financial institution is not answering my calls or not responding to my
e-mails?
 You can visit the respective financial instituti on’s official website and obtain the general
contact details or if a complaints facility is available, lodge a complaint through the website.
 For e -mails, SMS/WhatsApp messages, CBSL has required financial institutions to respond
within 45 days. Hence, ple ase allow a reasonable time for such institutions to respond to you.
 Majority of the financial institutions advertise dedicated phone numbers on TV. So you can
call the respective financial institutions on those numbers.

40. What if I have already made a requ est to a financial institution and am awaiting a response
or have already availed of the concessions granted to Small and Medium Enterprises (SMEs)
under Circular No. 2 of 2020 on Credit Support to Accelerate Economic Growth? Am I
eligible to avail of the concessions granted under Circular Nos.  4 and 5 of 2020 as well?
 The previous Circular No. 02 of 2020 on Credit Support to Accelerate Economic Growth is
still valid.
 Borrowers who wish to continue with the concessions granted under the previous scheme
(considering the longer period for capital moratorium and no additional interest cost for the
extended period. However, interest rate for working capital is higher) may c ontinue with the
previous scheme.
 If the borrower wishes to switch to the new scheme (including borrowers who have been
approved under the previous scheme) banks shall accommodate such requests under the new
scheme.
 However, bank shall not force the cust omer to continue with the previous scheme.
 Further, the borrower cannot enjoy concessions under both schemes at the same time.


 Further, the borrower cannot enjoy concessions under both schemes at the same time.

41. Can a retail distributer who has not registered his business and maintains no account can
get the moratorium?
 He will get an add itional 60 -day period to settle loans and advances that become due for
settlement during the 60 days period commencing from 01.04.2020.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTME NT

06 May  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 02  of 2020

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42. I’m doing an agriculture business with a turnover above Rs. 1 bn. Can I get the 6 -month
moratorium?
 A 6–month moratoriu m is granted for an agriculture business only if such business falls into
the SME category (i.e., annual turnover should be equal to or below Rs 1 bn).
 Since the turnover of this business is over Rs. 1 bn, a 6 –month moratorium will not be granted.
 However,  an additional 60 -day period will be granted to settle loans and advances that become
due for settlement during the 60 days period commencing from 01.04.2020.

43. I’m a self -employed vehicle importer, can I get a moratorium?
 Vehicle import business is not eli gible for any moratorium under Circular No. 04 and 05 of
2020, issued by the Central Bank of Sri Lanka.
 However, the general concession of an additional 60 -day period will be granted to settle loans
and advances that become due for settlement during the 60  days period commencing from
01.04.2020.

44. What is the applicable concession for Estate workers, who have obtained personal loans/
housing loan?
 They are eligible to obtain a three -month debt moratorium for all personal loans and leasing
where the granted amount is less than Rs. 1 million.
 If the granted amount is over Rs. 1 million, the general concession of an additional 60 -day
period will be gra nted to settle loans and advances that become due for settlement during the
60 days period commencing from 01.04.2020.

--------------------------  These FAQs were last updated on 06.05.2020 ----------------------------


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEP ARTMENT

  19 June  2020  FREQUENTLY ASKED QUESTIONS  (FAQs)      No. 0 3 of 2020

Amendments to Frequently Asked Questions  No. 02 of 2020
Circular Nos. 04, 05 and 06 of 2020 on Concessions granted to
COVID -19 Hit Businesses including Self -Employment and Individuals
the Letter Dated 27.03.2020 on Extraordinary Regulatory Measures,  and
the Monetary Law Act Order No. 1 of 2020 on Maximum Interest Rates on Pawning
Advances of Licensed Banks

Amended response to FAQ No. 20
What will happen to the interest component during the concession/moratorium period ?
▪ Payment of installments (interest + capital) is not required until the end of the moratorium
period. Once  the moratorium period ends, customers will have to start making payments as
agreed before the concessions were offered.
▪ However, licensed banks have raised concerns on interest cost relating to deposit/borrowing
liabilities during the corresponding debt  moratorium period and have made  representation s to
higher authorities in this regard. Based on the outcome of such representation s and subsequent
discussions  with CBSL , banks are permitted to  charge  additional interest on the deferred
installment s of term loans as follows:
➢ Up to 7% interest per annum as additional interest on the differed installments  in
relation to Equated Monthly  Installment (EMI) loans  granted in Rupee .
➢ The above interest shall be recovered at the end of the extended  remaining tenure of
the loan.  Banks should not recover  this interest immediately after the end of the
moratorium period.
➢ For other type s of facilities  granted in Rupee or foreign currency , banks and the
borrower need to  agree on a concessionary interest rate for the deferred instalment s.

 Please note that these ‘Frequently Asked Questions (FAQs)’ have been compiled based on


Please note that these ‘Frequently Asked Questions (FAQs)’ have been compiled based on
regulations issued by the Central Bank of Sri Lanka and the respons es herein are subject to
change  based on future regulations and/or amendments, if any, relating to the conces sions
granted to individuals and businesses affected by COVID -19.


2

Amended response to FAQ No. 28
What are the concessions available for Overdrafts?
▪ Permanent Overdraft facilities falling due for settlement or maturing or are reviewed during
the period up to 30.09.2020 have been extended up to 30.09.2020.
▪ However, in the case of Temporary Overdraft facilities as at 25.03.2020, the expiry shall be
extended by two months for eligible borrowers. Interest rate on such TOD facilities will be
capped at 13 percent per annum during the extended period.
▪ Borrowers are not required to service interest during the moratorium period. However, any
borrower who wishes  to pay interest on overdrafts, can do so.

--------------------------  These FAQs were last updated on 19.06.2020 ---------------------------


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEPARTMENT

 21 July 2020  FREQUENTLY ASKED QUESTIONS  (FAQs)      No. 0 4 of 2020

Amendments to Frequently Asked Questions  No. 02 of 2020

Amended response to FAQ No. 20
What will happen to the interest component during the concession/moratorium period ?
▪ Payment of installments (interest + capital) is not required until the end of the moratorium
period. Once  the moratorium period ends, customers will have to start making payments as
agreed before the concessions were offered.
▪ However, licensed banks have raised concerns on interest cost relating to deposit/borrowing
liabilities during the corresponding debt  moratorium period and have made  representation s to
higher authorities in this regard. Based on the outcome of such represe ntation s and subsequent
discussions  with CBSL , banks are permitted to  charge  additional interest on the deferred
installment s of term loans as follows:
➢ Up to 7% interest per annum as additional interest on the differed installments  in
relation to Equated Monthly Installment (EMI) loans  granted in Rupee .
➢ The above interest shall be recovered at the end of the extended  remaining tenure of
the loan.  Banks should not recover  this interest immediately after the end of the
moratorium per iod.
➢ For other type s of facilities  granted in Rupee or foreign currency , banks and the
borrower need to  agree on a concessionary interest rate for the deferred instalment s.
▪ Licensed banks may charge maximum of 4% per annum as additional interest for the
moratorium period in relation to leasing facilities granted for buses providing public transport
services and shall recover such amounts in equal installments over 2 years period or during the
remaining tenure o f the leasing facility, commencing from 01 October 2020 .

 Please note that these ‘Frequently Asked Questions (FAQs)’ have been compiled based on


Please note that these ‘Frequently Asked Questions (FAQs)’ have been compiled based on
regulations issued by the Central Bank of Sri Lanka and the respons es herein are subject to
change  based on future regulations and/or amendments, if any, relating to the concessions
granted to individuals and businesses affected by COVID -19.


2
 New FAQ No. 45
I’m engaged in tourism related business and I have obtained a vehicle lease facility. Is there a
possibility to extend the current moratorium period of 6 months granted to me?
▪ The C entral Bank of Sri Lanka, considering the potential adverse impact of COVID -19
pandemic on tourism sector businesses and individuals, requests licensed commercial
banks, licensed specialised banks, licensed finance companies and specialised leasing
compani es (hereinafter referred to as Financial Institutions) to provide the following relief
measures to eligible borrowers :
➢ To extend the existing 6 months moratorium period already granted to 12 months in
respect of capital outstanding of leasing facilities granted to tourism related vehicles.
➢ However, borrowers need to service interest during the moratorium period . Financial
institutions are requested to recover such interest in a manner that is not inconvenient
to the borrower.
➢ To waive off the accrued penal interest in respect of leasing facilities granted to
tourism related vehicles .

--------------------------  These FAQs were last updated on 21.07.2020 ---------------------------


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEP ARTMENT

22 Dece mber  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 05  of 2020

1

Monetary Law Act Order No. 3 of 2020 on
Maximum Interest Rates on Mortgage -backed Housing Loans

1. What are the key purposes/expectations of this Order?
▪ Support the expansion of home ownership of the Sri Lankan general public.
▪ Provide an additional stimulus to the domestic construction sector and its supply chains.

2. Who are eligible to obtain housing loans under the terms of this Order ?
Salaried employees  serving  in confirmed service in the  public and private sectors , obtaining new
mortgage -backed housing loans from a licensed bank under the terms of this Order , with effect from
10 December 2020.

3. What other conditions are to be met to be eligible to obtain housing loans under the terms of
this Order ?
▪ The same property to be developed/purchased is to be mortgaged to the bank.
▪ Such mortgage i s to be only a primary mortgage.
▪ If a condominium property is purchased out of this loan, then the bank and customers are to enter
into an arrangement to convert the property to a primary mortgage when the construction is
completed.

4. What are the terms of repayment for housing loans obtained under the terms of this Order ?
▪ Tenure of repayment:
o Will be from the date borrowed up to the period where the salaried employee is expected to
retire from such employment.  Please note that these FAQs  have been compiled based on regulations issued by the Central Bank
of Sri Lanka up to 22.12.2020 . An update to these FAQ s is available in FAQ s No. 01 of 2021
dated 17.02.2021


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEP ARTMENT

22 Dece mber  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 05  of 2020

2

o Employees are to provide banks a confirmation from their respective employer regarding the
retirement date/age, as applicable.
▪ Rate of interest:
o Interest during the first 5 years will be fixed at a rate of 7% per annum.
o Interest during the period after the first 5 years will vary based on the Average Weighted
Prime Lending Rate (AWPR) as the applicable rat e is AWPR plus 1% per annum.
o The interest rate variance after the fixed 5 years will take place every 6 months based on the
average monthly  AWPR for the banking sector published by the Central Bank of Sri Lanka
during the immediately preceding 6 months.

5. Will customers be allowed to obtain a housing loan  under the terms specified in this Order to
settle existing housing loans at the same or any other bank?
No.

6. For what purposes can the housing loan under this Order be utilized?
▪ Housing  loans under the terms of this Order can be obtained for  the following purposes provided
that the facility is secured by primary mortgage over the same property:
o purchase of land for construction of a house,
o purchase of a house,
o construction of a house, or
o renovation  of an existing house.
▪ However, this scheme is not intended for commercial scale real estate developers.

7. Can borrowers settle housing loans obtained under the terms of this Order without a pre -
settlement cost?
Yes, b ut only if the facility is settled in full at end of the first 5 years where the rate of interest remains
fixed  at 7% per annum.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEP ARTMENT

22 Dece mber  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 05  of 2020

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8. Is there a minimum or maximum limit on the amount permitted to be borrowed under the
terms specified in this Order?
No.
The amount will depend on the respective bank’s assessment/evaluation over the borrower’s income,
repayment capacity, value of property offered as the primary mortgage and any other factors based
on the bank’s internal policy and/or business decision.

9. Will a bank consider other income (non -related to salary) of the borrower as a source of income
for repayment?
At the discretion of the respective bank , based on their internal policy and/or business decision , the
bank may consider other income of the borrower  as an additional source of income for repayment.

10. Will a bank grant a joint housing loan under the terms of this Order for two individuals to
purchase/ develop the same property, when both are eligible for housing loans and both expect
to obtain the loan?
Yes, if both parties are salaried employees in the public and/or private sector  and t he housing loan is
secured by primary mortgage over the same property.

11. What if only one of the joint borrowers is a salaried employee in the public/private sector?
Such r equests can be considered favourably, however, only at the discretion of the respective bank
based on their internal policy and/or business decision.

12. Are borrowers  allowed to mortgage another (alternative) property and obtain a loan to build a
house or purchase land at some other place?
No, housing loans granted under the terms of this Order is limited only to develop/purchase the same
property that is offered as a primary mortgage to the bank.


CENTRAL BANK OF SRI LANKA
BANK SUPERVISION DEP ARTMENT

22 Dece mber  2020        FREQUENTLY ASKED QUE STIONS  (FAQs)                No. 05  of 2020

4

13. Will a bank grant a housing loan under the terms of this Order to purchase/ develop  properties
owned by the spouse of salaried employees?
Yes, a joint loan secured by primary mortgage over the same property  can be considered by the bank.

14. Can the  Non-executive  Directors  of companies with monthly fixed remuneration as resolved by
the company, apply for a housing loan under this Order?
Non-executive Directors  are not considered as employees of the company and there is no retirement
age for such pos itions. Therefore, such positions are not covered by this Order.

15. Will a bank grant an additional housing loan (2nd loan) under the terms of this Order, for the
same property,  which is purchased with bank funds, mortgaging the same property?
Housing loans  cannot be granted under the terms of this Order based on mortgages other than the
primary mortgages.

16. What if the existing housing loans are repaid at a much higher interest rate compared to the
terms specified under this Order? Can the interest rate of such existing housing loans be
reduced?
Considering the cost of funds, market interest rates and other relevant factors based on their internal
policy and/or business decision, the respective bank may reduce the interest rate of an existing
housing loan  at their discretion.  However , such housing loans will not fall under this scheme.

--------------------------  These FAQs were last updated on 22.12.2020 ----------------------------


Deshamanya Professor W D Lakshman GOVERNORCentral Bank of Sri Lanka30, Janadhipathi Mawatha, Colombo 1, Sri Lanka27 March 2020To All Chief Executive Officers of Licensed Commercial Banks and Licensed Specialised BanksDear Chief Executive OfficersExtraordinary Regulatory Measures taken by the Central Bank of Sri Lanka to Provide Flexibility to Licensed Banks to Support Businesses and Individuals Affected by the Outbreak of Coronavirus Disease (COVID-19)The Monetary Board of the Central Bank of Sri Lanka after assessing the safety and soundness of the banking sector, decided to introduce extraordinary regulatory measures to be implemented by licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks) considering the imminent need to provide flexibility to licensed banks to support businesses and individuals affected by the outbreak of COVID-19, in this exceptional situation.Accordingly, the extraordinary regulatory measures approved by the Monetary Board are set out below to provide further space for licensed banks to assist the affected parties on an urgent basis. The details of these Extraordinary Measures are annexed.1. Permit Domestic Systemically Important Banks (D-SIBs) and non D-SIBs to draw-down their Capital Conservation Buffers by 100 bps and 50 bps out of the total of 250 bps, respectively.2. Allow classification of non-performing loans and recovery of foreign currency loans:(a) Permit licensed banks to provide additional 60-day period to settle loans and advances which are becoming past due during March 2020 and permit licensed banks to not to consider such facilities as past due facilities until the end 60-day concessionary period with respect to borrowers who are not entitled to any other concessions.(b) Allow licensed banks to consider all changes made to payment terms and loan contracts from 16.03.2020 to 30.06.2020, due to challenges faced by customers amidst COVID-19 outbreak as modifications to loans and


due to challenges faced by customers amidst COVID-19 outbreak as modifications to loans and advances instead of


restructuring of loans and advances for classification of loans & advances and the computation of impairment.(c) Withdraw the requirement to classify all credit facilities extended to a borrower as non-performing when the aggregate amount of all outstanding non-performing loans granted to such borrower exceed 30% of total credit facilities.(d) Permit converting and recovery of loans in foreign currency to Rupee denominated loans, where necessary, subject to banks ensuring that borrowers do not get an undue advantage at the cost of country’s foreign reserves or cause pressure on the exchange rate and maintaining proper documentations.3. Defer the enhancement of capital by licensed banks, which are yet to meet the minimum capital requirement of end 2020, until end 2022. Such banks will need to restrict cash dividend distribution to 25 per cent of distributable profits in respect of financial Years 2019 and 2020 to preserve and build up capital.4. Reset the timelines for rectification of supervisory concerns/findings, if necessary, prioritizing on the severity/importance of the concerns raised for rectification. Banks which are required to meet timelines to address supervisory concerns/findings during the period up to 30 May 2020, shall be granted a further period of 3 months.5. Extend the reporting period for submission of statutory returns to the Bank Supervision Department by two weeks and publication of quarterly financial statements by one month until further notice. Depending on the circumstances, the Director Bank Supervision may permit further extensions.Licensed banks, however, should refrain from using the release of capital on any capital related relaxations granted, to distribute dividends or declare bonuses to its management and staff or avail of any other similar action. Accordingly, all licensed banks are requested to avail these relaxations in the best interest of supporting their customers and the economy at large, the benefits of which would, in


interest of supporting their customers and the economy at large, the benefits of which would, in return, accrue to the banking sector to remain resilient.Licensed banks are advised to diligently monitor their risk profile and resources in these times of stress, while the Central Bank will continue to closely monitor the liquidity and capital positions of licensed banks and any early warnings of stress to ensure safety and soundness of the banking sector.Prof. W D LakshmanChairman of Monetary Board andGovernor of the Central Bank of Sri LankaYours sincerely,


AnnexEXTRAORDINARY REGULATORY MEASURES TAKEN BYTHE CENTRAL BANK OF SRI LANKA TO PROVIDE FLEXIBILITY TOLICENSED BANKS TO SUPPORT COVID-19 AFFECTEDBUSINESSES AND INDIVIDUALSAt present, the banking sector in Sri Lanka as a whole is operating with healthy capital and liquidity buffers reflecting resilience and stability. Since 2017, the banks have built-up capital which can be utilized in times of stress. As at end 2019, total Capital Adequacy Ratio of the banking sector stood at 16.5 per cent, which is well above the regulatory minimum of 13.5 / 14.0 per cent and 12.5 per cent applicable for domestic systemically important banks (D-SIBs) and non D-SIBs, respectively. At present, the capital buffers in excess of the Capital Conservation Buffer (CCB) in the banking sector amounts to around Rs. 200 bn, whilst the CCB amounts to Rs. 170bn. These buffers can be drawn down and can be leveraged up to 8 to 10 times during times of stress.Overall liquidity position of banks has been healthy and the Liquidity Coverage Ratio (LCR) of the banking sector as at end 2019 was 212.8 per cent where the regulatory minimum is 100 per cent. The buffers maintained in excess of the required LCR were comfortably high indicating that banks had high quality liquid assets to meet the next 30 day outflows.The subsequent reduction in policy interest rates and statutory reserve requirement has enabled banks to strengthen its liquidity position. Further, the Central Bank of Sri Lanka (CBSL) has already announced that it will ensure the availability of adequate liquidity in the market in order to facilitate smooth operations amidst the COVID-19 outbreak.In the meantime, CBSL will closely monitor the liquidity position of banks, due to the potential changes to their liquidity risk profile considering the already announced debt moratoriums and other measures.Accordingly, the Monetary Board has decided to introduce the following extraordinary measures to provide further space for banks to assist


to introduce the following extraordinary measures to provide further space for banks to assist COVTD-19 affected businesses and individuals on an urgent basis.


1.RELEASE OF CAPITAL CONSERVATION BUFFERAs an immediate measure, D-SIBs and non-D-SIBs are permitted to draw-down their CCBs by 100 bps and 50 bps out of the total of 250 bps, respectively. This amounts to around Rs. 50 bn enabling banks to expand their lending capacity by nearly Rs. 400 bn to facilitate smooth credit flows to the economy and COVID-19 affected borrowers to sustain their businesses in the immediate future.CBSLwill re-assess the impact of CO VID-19 on bank’s capital and will release further CCB, if required.2. RELAXATIONS ON CLASSIFICATION OF LOANS & ADVANCES AND RECOVERY OF FOREIGN CURRENCY LOANSAs of end February 2020, the total banking sector loans and advances were around Rs. 8 Trillion and total non-performing loans and advances (NPLs) accounted to Rs. 435 Bn. It is observed that during the first two months of 2020, new NPLs close to Rs. 50 Bn have emerged in the banking sector. However, considering prevailing extraordinary circumstances the Monetary Board has decided to grant following measures in respect of classification of loans & advances and recovery of foreign currency loans to provide further space for banks to assist COVID-19 affected businesses and individuals.In circumstances where recovery of loans in foreign currency is remote, the banks are permitted, as a last resort, to convert such loans to Sri Lanka Rupee denominated loans, where necessary, and recover them in Rupees. However, banks shall ensure that borrowers do not get an undue advantage at the cost of country’s foreign reserves or cause pressure on the exchange rate. Further, licensed banks shall maintain necessary documents in this regard. Further instructions on this regard will be issued to banks by Director, Department of Foreign Exchange.The requirement to classify all credit facilities extended to a borrower as non-performing when the aggregate amount of all outstanding non-performing loans exceeding 30% of the total credit facilities extended will cease to apply with


non-performing loans exceeding 30% of the total credit facilities extended will cease to apply with immediate effect.With respect to borrowers who are not entitled to any other concessions, licensed banks are permitted to provide additional 60 days period to settle loans and advances which are becoming past due during March 2020. Such facilities should not be considered as past due facilities until the end 60 day concession period.


Banks shall consider all changes made to payment terms and loan contracts from 16.03.2020 to 30.06.2020, due to challenges faced by customers amidst COVID-19 outbreak as modifications to loans and advances instead of restructuring of loans and advances for the purpose of classification of loans & advances and computing impairment.Further, CBSL is in the process of finalizing a Credit Support Scheme to CO VID-19 affected customers through a debt moratorium and working capital facility at concessionary rates of interest, consequent to the decisions taken by the Cabinet of Ministers. CBSL has already issued initial instructions to banks to implement these decisions.3. DEFERING THE ENHANCEMENT OF MINIMUM CAPITAL REQUIREMENTCBSL in its efforts to strengthen the capital position of banks and with a view to encouraging banks to maintain scale to operate in an effective and meaningful manner, in 2017, enhanced the minimum capital requirement of licensed commercial banks and licensed specialised banks by end 2020 to Rs. 20 bn and Rs.7.5 bn, respectively. In this regard, the banks which were in the process of infusing capital or planning mergers had submitted their capital plans to the Central Bank.The requirement to meet higher levels of capital by the banks, which are yet to meet the requirement, is deferred until end 2022, considering the potential challenges ahead of raising capital and strategizing for mergers.All banks, however, should refrain from using the release of capital on any capital related relaxations granted, to distribute dividends or declare bonuses to its management and staff or avail of any other similar action.4. EXTENTION OF DEADLINES TO ADDRESS SUPERVISORY CONCERNSThe process of addressing supervisory concerns communicated through the Letters of Findings of the Statutory Examinations and other correspondence are in progress in banks. However, considering the disruptions to smooth operations of banking business and with the change of priorities due to


the disruptions to smooth operations of banking business and with the change of priorities due to the exceptional circumstances, meeting timelines set by CBSL and the Banks may be challenging. For this purpose, banks are permitted to reset the timelines if necessary, prioritizing them on the basis of severity/importance. In the case of banks which are required to meet timelines to address


supervisory concerns/findings during the period up to 30 May 2020, such banks are granted a further period of 3 months for rectification of supervisory concerns/findings.5. FACILITATING APPLICATION OF ACCOUNTING STANDARDSCBSL is in discussion with CA Sri Lanka (CASL) on any facilitation for banks on the application of SLFRS 9, considering the extraordinary circumstances arising from COVID-19 outbreak. Both CBSL and CASL will closely monitor the developments locally and internationally and take appropriate measures to address any concerns arising from the current situation.6. EXTENSION OF TIMELINES FOR SUBMISSION AND PUBLICATION OF STATUTORY RETURNS & FINANCIAL STATEMENTSTimely submission of Key Statutory Returns and publication of financial statements will be challenging during these exceptional times. Therefore, the reporting period for submission of statutory returns to the Bank Supervision Department will be extended by two weeks and publication of quarterly financial statements will be extended by one month until further notice. However, depending on the circumstances the period may be further extended.CBSL will continue to closely monitor the liquidity and the capital position of banks and any early warnings of stress, to ensure safety and soundness of the banking sector.All licensed banks are requested to avail these relaxations in the best interest of supporting their customers and the economy at large, benefits of which would in return accrue to the banking sector to remain resilient.


Annex IIIDeshamanya Professor W D Lakshman GOVERNORCentral Bank of Sri Lanka30, Janadhipathi Mawatha, Colombo 1, Sri LankaMay 2020To : All Chief Executive Officers of Licensed Commercial Banks and Licensed Specialised BanksDear Chief Executive Officers,Extraordinary Regulatory Measures to provide Liquidity to Licensed Banks amidst COVID-19 OutbreakThe Monetary Board of the Central Bank of Sri Lanka (CBSL) in the wake of the possible adverse impact on liquidity and other key performance indicators of licensed banks due to the implementation of the credit support scheme to assist COVID-19 hit businesses and individuals, and the need to meet other urgent liquidity needs, considers it imperative to strengthen the liquidity position of banks. The Monetary Board expects all financial institutions to provide uninterrupted credit flows in a prudent manner to revive the economic activities where in turn all sectors including financial sector of the economy will benefit. The confidence that certain fallback options are in place are expected to drive the banks' management to take their decisions comfortably.In view of the above, the Monetary Board granted approval for the following extraordinary measures to strengthen the liquidity position of licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks) to ensure continued supply of credit and to meet urgent liquidity needs of banks under these exceptional circumstances.(i) Provide additional funding under the refinance facility or through credit operations under the Monetary Law Act, enabling the banking sector to provide working capital and other loans at concessionary rates of interest, to spur demand in the economy.P O. Box 590ColomboTEL. : (9411)2477477(9411)2477577FAX: (9411) 2477677E-MAIL : governor@cbsl.lk10


(ii) Permit licensed banks to consider certain assets as liquid assets in the computation of Statutory Liquid Assets Ratio (SLAR) under the Banking Act during the period up to 30 June 2021, subject to hair-cut and other conditions. Licensed Bankswill be notified of these Assets in due course.(iii) Permit licensed banks to operate maintaining a Liquidity Coverage Ratio and Net Stable Funding Ratio at 90%, in this exceptional circumstance, with enhanced supervision and frequent reporting up to 30 June 2021.(iv) Allocate funds from the Sri Lanka Deposit Insurance and Liquidity Support Scheme as liquidity support to the banking sector.(v) Provide liquidity to banks under the provisions of the Monetary Law Act as emergency loans and advances in Rupees and facilitate the supply of liquidity for banks which are in need of funds. Such funds will be made available under an approved Framework of Emergency Loans and Advances to Licensed Banks based on acceptable collateral and liquidity forecasts.Licensed banks are strongly advised to monitor the liquidity position of their respective banks and use liquid funds accruing as a result of the above Measures prudently for intended purposes of strengthening credit flows in the economy and liquidity management, and to refrain from utilizing such funds for discretionary payments such as dividends, bonuses, share buybacks and other non-essential operational expenses.Yours sincerely,Deshamanya Prof.W D Lakshman Chairman of Monetary Board and Governor of the Central Bank of Sri Lanka
211


MONETARY BOARD
CENTRAL BANK OF SRI LANKA
27 April 20 20               MONETARY LAW  ACT ORDER                    No. 01 of 2020
Prof. W D Lakshman
Chairman of the Monetary Board and
 Governor of the Central Bank of Sri Lanka
 MAXIMUM INTEREST RATES ON  PAWNING ADVANCES
OF LICENSED BANKS
Issued under Section  104(1)(b) of the Monetary Law Act, No. 58 of 1949 , as amended .
Considering the necessity to provide relief to low income individuals who are pawning gold
jewellery to meet short -term financing needs due to the adverse economic situation resulting
from the COVID -19 outbreak , the Monetary Board hereby  issue s an Order on  maximum interest
rates of pawning advances granted by  licensed  commercial  banks  and licensed specialised banks
(hereinafter referred to as licensed banks) .

1. Empowerment
under the
Monetary Law
Act 1.1  In term s of Section  104(1)(b) of the Monetary Law  Act, the
Monetary Board may from time to time fix the maximum rates
of interest which licensed banks may charge for different types
of loans or other credit operations.
2. Applica bility of
this Order  2.1  This Order shall apply to the business of pawn broking,
(here inafter referred to as pawning) carried on by a licensed bank
or any branch or agency of such bank.
3. Maximum
interest rates on
pawning
advances
 3.1  The rate of interest chargeable by licensed banks on the money
lent for pawning advances coll ateralised by personal articles
made of gold accepted as a pledge , shall  be 12 % per annum or
1% per month for advances with a tenure of less than one year.
3.2  The above interest rate shall be applied to all new paw ning
advances and existing pawning facilities that become due for
renewal commencing the date of the Order.


MONETARY BOARD
CENTRAL BANK OF SRI LANKA
21 August 2020       MONETARY LAW ACT ORDER              No. 02 of 2020
1

MAXIMUM INTEREST RATES ON  LENDING PRODUCTS  OF LICENSED BANKS

Issued under Section  104(1)(b) of the Monetary Law Act, No. 58 of 1949 , as amended .

The Central Bank of Sri Lanka (CBSL) has adopted several policy measures in the recent past such as
reduction of policy interest rates, statutory reserve ratio and the bank rate,  and introduction of
extraordinary regulatory measures to reduce the cost of funds of licensed commercial banks (LCBs)
and licensed specialised banks (LSBs). These measures were implemented to facilitate licensed banks
to assist businesses and individuals affected by the COVID -19 crisis. Consequently, while overall
market interest rates have declined in recent weeks, the Monetary Board anticipates a further reduction
in overall market lending rates, thereby encouraging borrowing for productive economic acti vity and
reinforcing support for COVID - 19 hit businesses as well as the broader economy, given the conditions
of subdued inflation. The Monetary  Board has therefore, decided to adopt targeted measures to reduce
specific interest rates that it considered t o be excessive, which would help marginal borrowers.

Accordingly,  the Monetary Board hereby issues an Order on the  maximum  interest rates applicable on
Sri Lanka Rupee (LKR) denominated loans and advances granted by LCBs and LSBs, while taking
cognizan ce of differences in their funding structures.

1. Empowerment
under the
Monetary Law
Act 1.1  In terms of Section 104(1)(b) of the Monetary Law Act, the Monetary
Board may from time to time fix the maximum rates of interest which
LCBs and LSBs may charge for different types of loans or other credit
operations .
2. Interest Rates on
LKR
denominated
loans and
advances  2.1  Every LCB and LSB shall reduce the lending rates  for the following


loans and
advances  2.1  Every LCB and LSB shall reduce the lending rates  for the following
credit facilities  at least  to the stated  levels:
(i) Interest rates on credit card advances to 18 per cent per annum
commencing from the next billing cycle.
(ii) Interest rates on pre -arranged temporary overdrafts to 16 per cent
per annum.
(iii) Interest rates on the money lent for pawning advances
collateralised by pe rsonal articles made of g old accepted as a


MONETARY BOARD
CENTRAL BANK OF SRI LANKA
21 August 2020       MONETARY LAW ACT ORDER              No. 02 of 2020
2

pledge, to 10 per cent  per annum for all new pawning advances
and existing pawning facilities that are renewed .
 2.2  Every  LCB and LSB shall  ensure that the continuous decline in market
interest rates  are reflected on the interest rates charged for  all other
credit facilities at the time of their renewal  or when repricing of such
facilities .
 2.3  Every LCB and LSB shall reduce the penal interest rates charged on
all loans and advances, including credit fa cilities already granted, to a
level not exceeding 200 basis points per annum , for the amount in
excess of an approved limit or in arrears.
 2.4  Further to Circular s dated 04 March 2020, 28 May 2015 and 16
February 2001 on Recovery of Accommodation to Exporters, c harging
of enhanced  rates of interest on such accommodation where the
borrower does not repay on time , to be reduc ed to 200 basis points per
annum until further notice .
 2.5  Every LCB and LSB shall continue to provide concessions given  under
the following Circulars relating to interest rates and charging of penal
interest rates if such concessions  are more favourable than th ose
provided under this Orde r.
(i) No. 07 of 2019 on Concessions granted to Tourism Industry  dated
08 May 20 19.
(ii) No. 02 of 2020 on Credit Support to Accelerate Economic Growth
dated  30 January 2020.
(iii) No. 04 of 2020 on Relief Measures to Assist COVID -19 Affected
Businesses and Individuals  dated  24 March 2020.
(iv) No. 05 of 2020 on Rupees 50 Billion six -month Re -financing
Facility to Support COVID -19 hit Businesses including Self -
employment and Individuals  dated 27 March 2020.
(v) No. 07 of 2020 on Relief Measures to Assist COVID -19 Affected
Businesses and Individuals  16 July 2020.


MONETARY BOARD
CENTRAL BANK OF SRI LANKA
21 August 2020       MONETARY LAW ACT ORDER              No. 02 of 2020
3

 3. Monitoring  3.1  All LCBs and LSBs shall ensure the accuracy of interest rate s data
submitted to CBSL and maintain internal documented records
electronically or manually, in relation to the reductions in interest rat es
in respect of each type of credit facility  to which this Order applies.
4. Implementation  4.1  This Order shall come into effect commencing 24 August 2020.
5. Revocation of
Monetary Law
Act Orders  5.1  The following Monetary Law Act Orders  are hereby revoked
(i) No. 02 of 2019 on Enhancing Efficiency of  the Transmission of
Recent Policy Decisions to Rupee Denominated Market Lending
Rates  dated 24 September 20 19.
(ii) No. 01 of 2020 on Maximum Interest Rates on Pawning Advances
of Licensed Banks  dated 27 April 2020


MONETARY BOARDCENTRAL BANK OF SRI LANKADecember 2020MONETARY LAW ACT ORDER No. 03 of 2020MAXIMUM INTEREST RATES ON MORTGAGE-BACKED HOUSING LOANSIssued under Section 104( 1 )(b) of the Monetary Law Act, No. 58 of 1949, as amended.Considering the current and expected macroeconomic developments, the reduction in policy interest rates thus far during the year, the significant levels of excess liquidity prevailing in the domestic money market and the need for a continued downward adjustment in lending rates to revive the economy, the Monetary Board hereby issues an Order on maximum interest rates for mortgage-backed housing loans obtained by salaried employees in the public and private sectors, from licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks). This Order is also expected to support the expansion of home ownership of the Sri Lankan general public, and provide an additional stimulus to the domestic construction sector and its supply chains.1. Empowerment under the Monetary Law Act1.1 In terms of Section IO4(l)(b) of the Monetary Law Act, the Monetary Board may from time to time fix the maximum rates of interest which licensed banks may charge for different types of loans or other credit operations.2. Applicability of this Order2.1 This Order shall apply to housing loans granted by licensed banks after implementation of this Order to salaried employees serving in confirmed service in the public and private sectors in Sri Lanka:(i) secured by prirnary mortgages over the same property; and(ii) for purchase of condominium property based on an arrangement acceptable to licensed banks which must be converted into a primary mortgage over the property when construction is completed.3. Interest Rates and tenure of mortgage-backed housing loans of salaried employees3.1 The applicable maximum interest rates for mortgage-backed housing loans specified under Order 2.1 above shall be:(i) A fixed interest rate of 7 per cent per


housing loans specified under Order 2.1 above shall be:(i) A fixed interest rate of 7 per cent per annum at least for the first five years of the loan tenure.


Ol\- December 2020MONETARY BOARD CENTRAL BANK OF SRI LANKAMONETARY LAW ACT ORDERNo. 03 of 2020(ii) A floating interest rate linked to the monthly Average Weighted Prime Lending Rate (AWPR) plus a maximum margin of 1 percentage point for the remaining tenure of the loan.(iii) In computing the monthly loan instalment for the first five years, the licensed bank shall consider the interest rate for the entire tenure of the loan as 7 per cent per annum.(iv) After the expiry of the fixed rate loan tenure, the licensed bank may re-price the loan every six months, based on the average monthly AWPR published by the Central Bank of Sri Lanka during the immediately preceding six months.4. Settlement5. Implementation3.2 In deciding on the loan tenure, licensed banks may consider the retirement year of the borrower as confirmed by the employer as the final year of settlement.4.1 Licensed banks shall permit borrowers to settle the loan obtained under this Order at the end of the fixed tenure of five years without being subject to any early settlement fee or charges.5.1 Licensed banks shall issue internal Circulars to its Branches expeditiously to implement this Order with effect from 10 December 2020.Prof. W D LakshmanChairman of the Monetary Board andGovernor of the Central Bank of Sri Lanka
2


MONETARY BOARD CENTRAL BANK OF SRI LANKA24 March 2020 CIRCULAR No. 04 of 2020RELIEF MEASURES TO ASSIST COVID-19 AFFECTED BUSINESSES AND INDIVIDUALSIn line with the decision taken by the Cabinet of Ministers at the Cabinet meeting held on 20.03.2020 on the Direction issued by His Excellency the President to provide relief measures to assist businesses and individuals who are adversely affected by the prevailing Covid-19 outbreak, the Central Bank of Sri Lanka hereby issues this Circular to the licensed commercial banks, licensed specialised banks and leasing companies, hereinafter referred to as financial institutions.1. All such financial institutions shall implement a debt moratorium (on capital and interest) as follows:a. A six-month moratorium on the leasing rentals of all three-wheelers, school vans, lorries, small goods transport vehicles and buses operated by the self-employed;b. A moratorium until 30.05.2020 on personal loans granted to all private sector non-executive employees;c. A three-month moratorium for all personal loans and leasing rentals of value less than Rs. 1 million; andd. A six-month debt moratorium for affected industries in small & medium enterprises, tourism, apparel, plantation, IT and related logistic service providers.2. Financial institutions shall provide working capital requirements at an interest rate of 4% and waive-off interest payments for at least 6 months for sectors in item 1(d) above. An interest subsidy will be included in refinance.3. Financial institutions are required to accommodate customers to submit loan applications for items 1 and 2 above until 30.04.2020 and financial institutions are required to finalise the same within 45 days.4. Financial institutions shall charge a maximum interest rate of 15 per cent on local credit card transactions of value up to Rs. 50,000; the minimum monthly payment on credit cards shall be reduced by 50 percent; and repayment of all credit cards below the limit of Rs. 50,000 to be extended


by 50 percent; and repayment of all credit cards below the limit of Rs. 50,000 to be extended until 30.04.2020.5. Licensed banks shall extend the validity period of cheques valued less than Rs. 500,000 until 30.04.2020.


MONETARY BOARDCENTRAL BANK OF SRI LANKA24 March 2020CIRCULARNo. 04 of 20206. All branches of licensed banks shall be kept open from 8.00 a.m. to 1.00 p.m. on non-curfew days with a minimum number of employees, and the corporate branches shall be kept open during curfew days to facilitate international transactions relating to food, medicine, travel and other customers.7. Detailed instructions on foregoing shall be issued on 27.03.2020.PrdEW D LakshmanChairman of the Monetary Board and Governor of the Central Bank of Sri Lanka
2


27 December 2021*
MONETARY BOARI)
CENTRAL BANK OF SRI LANKA
BANKING ACT DETERMINATION No.01 of 2021
ANNUAL LICENCE FEE OF
LICENSED COMMERCIAL BANKS AND LICENSED SPECIALISED BANKS
Determination made by the Monetary Board of the Central gurk of Sri Lankaunder
Sections 8 and 76D (6) of the Banking Act, No. 30 of 1988, as amended.
In terms of Sections 8(1) and 76D (6) of the Banking Act No. 30 of 1988, the Monetary Board
has determined that every licensed commercial bank and licensed specialised bank shall pay the
licence fee in respect of the calendar year 2022 to the Central Bank of Sri Lanka on or before 31
January 2oz2,based on the total assets of such bank as at the end of 2021, as set out in the Table
below.
Annual licence fee for theyear 2022
Total Assets
as at the end202l (Rs. Bn)Licence Fee
(Rs. Mn)
Above 2,000 38.0
Above 1,000 to 2,000 3s.0
Above 500 to 1,000 28.5
Above 200 to 500 25.0
Above 125 to 200 18.5
Above 75 to 125 t2.5
25 to 75 6.5
Less than 25 J.J
fil ttl e'-/a-
Nivard Ajith Leslie Cabraal
Chairman of the Monetary Board and
Governor of the Central Bank of Sri Lanka


MONETARY BOARD CENTRAL BANK OF SRI LANKA25 April 2021 BANKING ACT DIRECTIONS No. 07 of 2021FORWARD SALES AND PURCHASES OF FOREIGN EXCHANGE BY LICENSEDCOMMERCIAL BANKSIssued in terms of powers conferred by Section 46(1) of the Banking Act No. 30 of 1988, as amended.In view of the need to avoid excess volatility in the foreign exchange market and the impact on banks’ risk management, licensed commercial banks (LCBs) shall refrain from entering into forward contracts of foreign exchange with value date beyond Spot date except for the following, until further notice.(i) Forward purchase of foreign exchange from their customers including from exporters.(ii) Facilitate SWAP arrangements on foreign exchange borrowings of Licensed Specialised Banks and Licensed Finance Companies regulated by the Central Bank of Sri Lanka (CBSL) in order to hedge their FX exposures arising from foreign currency borrowings, approved by CBSL.(iii) Facilitate SWAP arrangements on foreign exchange borrowings of corporate clients in order to hedge their FX exposures arising from foreign currency borrowings, approved by CBSL.(iv) Amend/extend the value date of existing forward/SWAP contracts of clients at historical rates based on express requests from clients, after verifying the bona fide of the transactions.(v) Enter into inter-bank forward and SWAP transactions with single counterparty (i.e. only between two banks).(vi) Enter into forward cross currency transactions.FrofrWU LakshmanChairman of the Monetary Board andGovernor of the Central Bank of Sri Lanka1