The Central Bank of Sri Lanka (CB) has instructed commercial banks to suspend capital and interest payment on loans and offer new loans to individuals and businesses affected by Cyclone Ditwah.
It said in a statement that all banks should provide these relief measures to those affected by the disaster. Under temporary debt relief, banks were instructed to suspend the repayment of capital and/or interest of existing credit facilities of the affected borrowers, for a period of three to six months, on a case-by-case basis; and not to charge an interest rate above the applicable contract rate of interest during the period of suspension and to ensure that any interest will not be charged on the deferred interest payments.
Banks were instructed to grant new loan facilities to affected individuals and businesses on a case-by-case basis, considering the repayment capacity of the borrower. The repayment of the new loan will commence after a minimum grace period of three months beyond the expiry of the suspension period; any new loan granted up to a period of two years, will be charged at a maximum fixed interest rate of 9 per cent p.a. or the contract interest rate applicable to the respective borrower for overdrafts or loan facilities, whichever is lower.
For any new loan granted for a longer tenor beyond two years, the interest rate may be revised by the bank to a rate linked to Average Weighted Prime Lending Rate (AWPR) at the end of 2 years as specified in the loan facility agreement with the borrower.
In addition, banks have been requested to suspend charging for cheque returns, stop payments, late payment fees, credit restructuring/modification fees and penal interest on all credit facilities of affected borrowers during the period up to 31.01.2026. Where charges are levied through automatic system generated entries, such charges should be refunded to the relevant account within 3 business days of being charged.
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