Sri Lanka banks met lending rate ceiling a week from 2019 deadline: Deputy Governor

ECONOMYNEXT – All commercial banks operating in Sri Lanka had complied with ceiling rates set by the central bank for a December 2019 within a week of the deadline, Deputy Governor Nandalal Weerasinghe said.

“All banks complied within a week,” Weerasinghe said. “As a result, we did not impose strict penalties.”

He said publishing their names had prompted the banks to action.

Sri Lanka’s central bank slapped the controversial price controls both on deposits and lending rates raising concerns.

The deposit price controls were removed and the lending controls are to be reviewed in March.

Weerasinghe said, the central bank expected average lending rates to fall to 12.5 percent by March.

At the moment average lending rates were at 12.5 percent.

The central bank cut its policy rate from 8.00 percent to 7.5 percent on January 30.

The rate cut would assist the banks to reach the targets, Weerasinghe said.

However the rates are being cut as private credit is showing signs of picking up and state borrowings are also expected to go up, after value added taxes were slashed from 15 to 8 percent.

State enterprises are also running losses, especially the Ceylon Electricity Board. (Colombo/Jan30/2020)