Central Bank directs banks to grant relief for disaster-hit borrowers
The Central Bank of Sri Lanka (CBSL) has instructed all licensed banks to grant relief to individuals and businesses affected by recent cyclonic and flood disasters. The directive, issued through Circular No. 04 of 2025, aims to support recovery while maintaining financial system stability.Banks have been asked to accept written or electronic requests for relief by 15 January 2026. Measures include a 3–6 month suspension of capital and interest repayments on existing loans, with interest capped at the contracted rate and no additional interest on deferred amounts.
They are also required to extend new loan facilities based on borrowers’ repayment capacity. Repayments must begin only after a minimum three-month grace period following the suspension. Loans up to two years must carry a maximum fixed interest rate of 9% or the borrower’s existing rate, whichever is lower, while longer-tenor loans may be re-priced after two years using the Average Weighted Prime Lending Rate.Until 31 January 2026, banks must suspend cheque return charges, stop-payment fees, late fees, restructuring fees and penal interest for affected borrowers, and refund any system-generated charges within three business days.Banks must clearly communicate restructuring terms, obtain borrower consent, and provide written reasons for any rejection of relief, informing borrowers of their right to appeal to CBSL. They have also been told not to reject new loan applications solely based on adverse CRIB records.
CBSL said the relief package complements government-led disaster assistance to restore livelihoods and support business recovery.
