Monday Nov 10, 2025
Monday Nov 10, 2025
Monday, 10 November 2025 03:28 - - {{hitsCtrl.values.hits}}
The Central Bank of Sri Lanka (CBSL) has tightened credit conditions for vehicle financing by reducing the maximum loan-to-value (LTV) ratios that banks and finance companies can offer, effective 8 November 2025.
Under the new Directions No. 03 of 2025 issued by Governor Dr. Nandalal Weerasinghe, the LTV ratio for commercial vehicles has been reduced to 70% from 80%, while the ratio for motor cars, vans, and SUVs has been cut to 50% from 60%.
Three-wheelers remain capped at 50%, while credit for any other vehicle types has been lowered to 50% from 70%.
The new framework applies to all Licensed Commercial Banks, Licensed Specialised Banks, Licensed Finance Companies (LFCs), and Registered Finance Leasing Establishments (RFLEs). It replaces CBSL Act Directions No. 02 of 2025.
Transitional provisions will apply to vehicles imported under Letters of Credit (LCs) opened before the new rules take effect. Cars imported under LCs opened between 18 July and 8 November 2025 will still qualify for the previous, higher ratios of up to 80% for commercial vehicles and 60% for passenger vehicles.
For LCs opened before 18 July 2025, the earlier transition provisions continue, which allowed up to 90% financing for electric vehicles and higher ratios for certain categories.
The CBSL said the new limits are part of its macro-prudential measures to ensure prudent lending and manage credit growth in the vehicle financing sector. The updated rules require financial institutions to use verified market valuations from authorised agents or professional valuers when determining the loanable value of a vehicle.
The external sector registered a current account deficit in September 2025 for the first time this year on surging vehicle imports. The CBSL said that vehicle imports, comprising both personal and commercial vehicles, totalled $ 286 million in September, leading to total vehicle imports of $ 1.2 billion in the first nine months of the year.
Governor Weerasinghe in October said the CBSL has revised the vehicle import forecast from $ 1.2 billion to $ 1.5 billion for 2025.
According to the CBSL Financial Stability Review released in October 2025, vehicle loans accounted for over 63% of loans of the finance company sector.
