Sri Lanka banks ordered not to recover bad loans from paddy millers

ECONOMYNEXT – Sri Lanka has ordered commercial and specialized banks to halt bad loan recoveries from paddy millers and not to start new recovery action for the next six months.

The recovery suspension came amid government “initiatives to support the SME Paddy millers” in upcoming harvesting seasons.

If a bank has already given notice under Recovery of Loans by Banks (Special Provisions) Act of 1990, the Mortgage Act of 1949 or the Finance Leasing Act of 2000, banks have to suspend recovery on the condition that the borrower reaches a debt re-payment agreement.

Banks have been ordered to delay passing new resolutions under the laws. If they had been passed, auctioning of assets would be delayed till June 30, 2021.

If there is legal action, borrowers would be allowed to enter into a debt repayment agreement by giving an affidavit.

Any other legal actions shall be suspended until June 30. (Colombo/Jan20/2021)

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