ECONOMYNEXT – Sri Lanka has extended a debt moratorium introduced at the request of the current administration first given to bank customers experiencing difficulties to borrowers of finance and leasing companies.
The central bank said it had been extended to non-bank financial institutions “considering the importance of extending the benefits of the borrowers” of the sector.
Defaulted customers would have to apply before March 31, 2020 to get relief.
However contracts that have been terminated, assets re-possessed and are in court will not be eligible for the scheme.
Finance companies have notched up bad loans of 10.6 percent compared to less than 5 percent for banks, using a less tight arrears rule.
Leases and hire purchases credit will be re-scheduled with accrued penal interest waived and 10 percent of outstanding interest (after penal interest waiver) deferred. The deferred interest will be waived if the re-scheduled loan is repaid.
If more than 50 percent of the capital had already been paid, the borrower would get double the remaining time to repay the loans, with a ceiling of four years.
If the borrower had paid between 25 and 50 percent, the balance would be paid over twice the remaining period subject to a limit of five years.
Similar provisions would apply to credit which are not leases or hire purchase agreements. (Colombo/Mar13/2020)