Sri Lanka Central Bank Announces Relief Measures for Small and Medium Enterprises, Advises Banks to Provide Concessions

The Central Bank of Sri Lanka has introduced a series of relief measures to support small and medium enterprises affected by economic challenges, including the COVID-19 pandemic and recent macroeconomic instability. The initiative aims to provide financial assistance, loan restructuring options, and interest waivers to help businesses recover and sustain operations. Additionally, the central bank has advised banks to extend concessions to SME borrowers who initiated business revival discussions by March 31.  

Key Highlights Of The Relief Measures  
- The relief package applies to SME borrowers whose credit facilities have been classified as non-performing since April 2019.  
- Loan rescheduling will be based on the borrower’s repayment capacity and submission of a viable business revival plan.  
- Interest waivers will be granted on unpaid interest accrued between April 2019 and December 2024, with varying percentages based on settlement timelines.  
- Eligible borrowers must initiate discussions with banks by March 31, 2025, to qualify for relief measures.  
- Banks have been advised to provide concessions to SMEs that have engaged in business revival discussions before the deadline.  

Impact On SME Recovery  
- The measures aim to ease financial burdens on businesses struggling with debt repayment and liquidity constraints.  
- Banks have been advised to provide additional working capital facilities to eligible borrowers, ensuring continued business operations.  
- The suspension of Parate execution under these relief measures will remain in effect until March 31, 2025.  

Implementation And Compliance  
- Licensed banks must finalize rescheduling agreements with borrowers by June 15, 2025.  
- SMEs with outstanding credit below 25 million rupees must commence repayment by December 31, 2025, while larger borrowers have earlier deadlines.  
- Banks are encouraged to consider new loan applications from eligible SMEs without rejecting them solely based on adverse credit records.  

About The Central Bank Of Sri Lanka  
The Central Bank of Sri Lanka oversees monetary policy and financial stability in the country. Its latest relief measures reflect a commitment to supporting SMEs, which play a crucial role in economic growth and employment generation.  

Sources: Central Bank of Sri Lanka, Hiru News, Business Standard.