No plans to restrict vehicle imports: CBSL Chief

Thursday, 24 July 2025 00:12 - - {{hitsCtrl.values.hits}}

Customs confirms over 25,000 vehicles imported so far generating over Rs. 280 b
Says LTV policy adjusted for financial stability amid surge in post-ban vehicle imports

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe yesterday clarified that neither it nor the Government has imposed any limits on vehicle imports, affirming that the market remains open following the lifting of import restrictions in February 2025.

“There is no concern from the CBSL on vehicle imports. There is no limit and the open market will continue for vehicle imports. The Government is also not against that idea, as far as I know,” he told journalists at the post-Monetary Policy Review meeting media briefing.Dr. Weerasinghe is of the view that the subject Minister has also made a statement indicating that there would not be a change in the decision to open the market for vehicle imports.

Vehicle imports officially resumed on 1 February 2025, after nearly four years of stringent restrictions following the COVID-19 pandemic and economic crisis.

Sri Lanka Customs yesterday confirmed that over 25,000 vehicles have been imported, contributing around Rs. 280 billion in revenue. The Government expects an earning of Rs. 450 billion from vehicle imports by the end of the year.

Sri Lanka has committed to appropriate contingency measures for vehicle import tax, which is the main source to boost its revenue collection this year, the International Monetary Fund (IMF) said in its latest report.

It said high-frequency data suggest a steady growth in motor vehicle imports after the removal of import restrictions on 1 February, with around $ 675 million in Letters of Credit (LCs) opened and corresponding tax collection at 0.5% of GDP by 10 June.

Dr. Weerasinghe also shared insights on the CBSL’s recent directive to adjust the Loan-to-Value (LTV) ratios, a key macro prudential measure intended to maintain financial system resilience.

“For a long time, we had import restrictions, so adjusting LTV ratios was not necessary. Now, with vehicle imports reinstated, we are implementing a consistent LTV policy across vehicle types, separating commercial and personal use,” he added.

As per the updated policy, upward revisions in LTV ratios for unregistered motor cars, SUVs, vans, and three-wheelers are likely to improve affordability for consumers in these categories. This development is seen as providing a moderate improvement for both Licenced Commercial Banks (LCBs) and Licenced Finance Companies (LFCs) with exposure to these vehicle segments.

The revised LTV ratio for unregistered motor cars has been increased from 50% to 60%, while three-wheelers now see a significant rise from 25% to 50%. These changes are expected to stimulate demand and ease consumer entry into ownership, helping to partially offset any negative impact from LTV tightening elsewhere.

“This is a risk management tool. High LTV ratios can lead to negative equity situations, where the value of the vehicle falls below the outstanding loan. This increases the risk of default for both the lender and the borrower. Thus, setting a reasonable equity contribution helps ensure financial stability,” he stressed.

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