Private sector borrowings slows in July

Monday, 8 September 2025 04:58 - - {{hitsCtrl.values.hits}}

Total private sector borrowings increased by Rs. 201.5 billion in July 2025, resulting in the outstanding amount crossing Rs. 9.5 trillion during the first seven months of the year. However, the new credit in July was lower than the Rs. 221.5 billion recorded the previous month.

According to the latest Central Bank of Sri Lanka (CBSL) data, domestic banking sector credit to the private sector in July amounted to 192.7 billion, up 20.7% year-on-year (YoY). Domestic banking sector credit to the private sector was higher the previous month at 210.5 billion, but grew at a slower 17.9% YoY rate.

Total private sector borrowings in July was the second highest for the year behind June. In April, credit demand was low at Rs. 87 billion, a development linked to the Sinhala-Tamil New Year holidays.

February saw Rs. 105 billion in demand for credit, whilst January suffered a reduction of Rs. 4.6 billion following a recent high of Rs. 193 billion in credit demand in December 2024.

The CBSL’s banking sector’s Willingness to Lend Index released in August showed that it had grown in the second quarter of 2025, continuing a nine-quarter upward trend to reach a five-quarter high.

The CBSL said in its Credit Supply Survey: Trends in 2Q and Outlook for 3Q 2025 that the increasing trend is expected to continue during Q3 2025 due to favourable liquidity positions of banks, economic revival, and positive economic outlook.

However, the Index value shows a dip from 59.6 in Q2 2025 to 41.4 in Q3 2025, lower than the previous three quarters and Q4 2024’s Index value of 47.5.

Meanwhile, the Government borrowed only Rs. 9.5 billion from domestic banks in July 2025, taking the total outstanding to Rs. 6.61 trillion, up 5.3% from a year ago.

Domestic banking credit to public corporations declined by Rs. 33.8 billion in July 2025, taking the total outstanding credit to Rs. 550.3 billion, down 11% from a year ago.