Private borrowing slows to Rs. 169 b in July, down 31% from June

Monday, 14 September 2026 02:08 - - {{hitsCtrl.values.hits}}

Private sector borrowing from Sri Lanka’s banking system slowed sharply in July, with net credit expanding by Rs. 169.1 billion month-on-month (MoM), down 31% from June’s Rs. 245.3 billion increase, provisional data from the Central Bank of Sri Lanka (CBSL) showed.

Outstanding credit to the private sector rose to Rs. 11.45 trillion in July from Rs. 11.28 trillion in June. On a year-on-year (YoY) basis, private sector credit growth eased to 26.4% from 27.4% in June.

Monthly borrowings have swung sharply since June 2025, from a low of Rs. 83 billion in January 2026 to a high of Rs. 263 billion in November 2025, with a further trough of Rs. 101 billion in April and a rebound to Rs. 258 billion in March. July’s figure sits roughly mid-range on this pattern, in line with the volatility seen through the period rather than marking a clear break in trend.

Lending by Domestic Banking Units (DBUs) accounted for the bulk of July’s increase, rising by Rs. 158 billion MoM to Rs. 10.86 trillion from Rs. 10.7 trillion in June. DBU credit growth eased to 28.5% YoY from 29.6% in June. Credit extended through Offshore Banking Units (OBUs) rose by Rs. 11.2 billion MoM to Rs. 590.4 billion, though it remained 3% below the year-earlier level.

In contrast, net credit to the Government from the banking system contracted further, falling by Rs. 165.9 billion MoM to Rs. 7.83 trillion in July from Rs. 7.99 trillion in June. The YoY contraction widened to 8.2% from 5.8% in June.

Net credit to the Government from the CBSL fell by Rs. 147 billion to Rs. 1.55 trillion, a contraction of 16.2% YoY, while credit from commercial banks declined by Rs. 19 billion to Rs. 6.28 trillion, down 6% YoY.

Outstanding credit to public corporations and State-Owned Business Enterprises (SOBEs) declined by Rs. 23.6 billion MoM to Rs. 486 billion in July from Rs. 509.6 billion in June, a YoY contraction of 19.5%.

Net foreign assets (NFA) of the banking system rose sharply, increasing by Rs. 253.3 billion MoM to Rs. 1.52 trillion in July from Rs. 1.26 trillion in June, taking YoY growth to 72.8%. Net domestic assets (NDA) of the banking system fell by Rs. 127.8 billion MoM to Rs. 15.53 trillion, though YoY growth stood at 8.4%.

On broader monetary aggregates, reserve money rose by Rs. 5.3 billion MoM to Rs. 1.89 trillion in July, with YoY growth slowing to 12.2% from 13.8% in June. M2 rose by Rs. 70.9 billion MoM to Rs. 14.9 trillion, up 11.2% YoY. M2b, the broadest measure of money supply, increased by Rs. 125.5 billion MoM to Rs. 17.04 trillion, with YoY growth accelerating to 12.1% from 11.5% in June.