Sri Lanka central bank planning housing loan scheme under govt policy directions: CB Governor

ECONOMYNEXT – Sri Lanka’s central bank will announce a housing loan program for low and middle income borrowers in line with government policy directions on priority areas, Governor W D Lakshman said.

“The Central bank would be looking at priority areas in the economy as indicated in the overall government policy directions to initiate appropriate credit and other programs,” he said.

“Given the widespread benefit to a very large number of people from such scheme we hope to soon begin with announcements about a housing credit program for low and middle income groups.”

He said the economic growth that the central bank wanted to promote depended on banking sector reactions to the monetary policy stance that is continued.

The monetary authority had started several credit schemes with central bank re-finance which involves creating new money rather than using real deposits.

The central bank then started a guarantee scheme to give loans with real deposits.

Under a central bank re-finance scheme, 100 billion in loans had been approved Deputy Governor Nandalal Weerasinghe said.

Loans given with new or excess liquidity can put pressure on the currency peg. However in May and June, private credit was negative. (Colombo/Aug20/2020)

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