ECONOMYNEXT – Sri Lanka’s government said it has asked leasing companies to suspend seizing leased vehicles from customers who had defaulted on payments after being charged penal interest rates for delaying to pay instalments.
Finance Minister Ravi Karunanayake said the government had received many complaints that leasing companies were charging excessive monthly penal rates on delayed instalment payments.
“This acts as an ‘interest on interest’ and puts the customers who are already finding it difficult to pay their monthly instalments into even more difficulty,” he told a news conference.
The finance ministry has asked leasing companies to suspend seizing vehicles bought on leases or hire purchase schemes until end-September after which an effective solution would be worked out, he said.
He said the government, in its interim budget earlier this year, had curbed charging of penal rates in credit card payment defaults and the same policy would apply to vehicle leasing.
“A few banks are still charging penal rates. We have asked them not to harass customers.”
Karunanayake said it was unfair for financial institutions which pay only 6-7 percent on deposits to charge excessive lending rates from customers. (Colombo/August 7 2015)