Tuesday Oct 13, 2026
Tuesday Oct 13, 2026
Monday, 12 October 2026 04:31 - - {{hitsCtrl.values.hits}}
Private sector borrowing from Sri Lanka’s banking system slowed for a second consecutive month in August. Net credit expanded by Rs. 105.7 billion month-on-month (MoM), the smallest increase since April and 37% below July’s Rs. 169.1 billion, provisional data from the Central Bank of Sri Lanka (CBSL) showed.
Outstanding credit to the private sector rose to Rs. 11.56 trillion in August from Rs. 11.45 trillion in July. Year-on-year (YoY) growth eased to 24.5% from 26.4% in July.
August’s increase was less than half the Rs. 226.8 billion recorded in August 2025. Since June 2025, monthly borrowings have ranged from Rs. 83 billion in January to Rs. 263 billion in November 2025, with a trough of Rs. 101 billion in April.
The slowdown came largely from Offshore Banking Units (OBUs), which handle banks’ foreign currency business. OBU credit contracted by Rs. 33.1 billion MoM to Rs. 557.3 billion, after rising by Rs. 11.2 billion in July, and the YoY decline deepened to 6.5% from 3%. Lending by Domestic Banking Units (DBUs) rose by Rs. 138.7 billion to Rs. 11 trillion from Rs. 10.86 trillion, a smaller increase than July’s Rs. 158 billion, with YoY growth easing to 26.6% from 28.5%.
Net credit to the Government from the banking system fell by Rs. 83.2 billion MoM to Rs. 7.74 trillion, though the YoY contraction narrowed to 7.7% from 8.4% in July. The decline stemmed from the CBSL, whose net credit to the Government fell by Rs. 114.4 billion to Rs. 1.44 trillion, a 22.9% YoY contraction. Net credit from commercial banks rose by Rs. 31.2 billion to Rs. 6.3 trillion, though it remained 3.3% below the year-earlier level.
Outstanding credit to public corporations and State-Owned Business Enterprises (SOBEs) declined by Rs. 6.2 billion MoM to Rs. 479.8 billion, widening the YoY contraction to 22.3% from 19.5%.
Net foreign assets (NFA) of the banking system, its foreign assets minus foreign liabilities, rose by Rs. 109.5 billion MoM to Rs. 1.67 trillion from Rs. 1.56 trillion, though YoY growth slowed to 67.5% from 78.1%. The CBSL’s NFA rose by Rs. 168.1 billion to Rs. 1.08 trillion, while commercial banks’ NFA fell by Rs. 58.6 billion to Rs. 597.6 billion. Net domestic assets (NDA) fell by Rs. 12.6 billion to Rs. 15.47 trillion, with YoY growth easing to 7.6% from 8%.
On broader monetary aggregates, reserve money rose by Rs. 19.9 billion MoM to Rs. 1.91 trillion, with YoY growth slowing to 11.8% from 12.2%. M1, the narrowest measure of money, rose by Rs. 50.1 billion to Rs. 2.39 trillion, with YoY growth picking up to 12.6% from 11.8%. M2 rose by Rs. 132 billion to Rs. 15.04 trillion, with YoY growth edging up to 11.3% from 11.2%. M2b, the broadest measure of money supply, increased by Rs. 97 billion to Rs. 17.14 trillion, with YoY growth slowing to 11.5% from 12.1%.
