Credit to private sector tops Rs. 8.5 t mark

Monday, 16 June 2025 04:30 - - {{hitsCtrl.values.hits}}

Demand slackens in festive month of April but reflects 15% YoY growth

Outstanding credit to the private sector as at the end of April crossed the Rs. 8.5 trillion mark, with lower demand in the festive month but clocking over 15% year-on-year (YoY).

At the end of April, credit to the private sector stood at Rs. 8,501.6 billion as against Rs. 8,414.6 billion in March, reflecting an increase of Rs. 87 billion.

The banking sector saw a spike in private sector credit demand in March at Rs. 158 billion, whilst in February it amounted to Rs. 105 billion.

Annual growth in outstanding private credit was 11.6% in January and 12.9% in February and 13.8% in March. The figure as at end December 2024 was Rs. 8,156 billion, reflecting an annual change of 10.7%.

The month of December saw a whopping Rs. 193 billion in credit demand from the private sector, bolstering the 2024 figure.

The Central Bank of Sri Lanka (CBSL) last month said credit flows to the private sector remain strong, with all economic sectors benefitting from such expansion. It also said this credit expansion is expected to continue throughout the year with support from its last Monetary Policy easing move in May.

The Monetary Board in its May Monetary Policy Review further eased its policy stance, reducing the Overnight Policy Rate (OPR) by 25 basis points.

The Board is of the view that this measured easing of monetary policy stance will support steer inflation towards the target of 5%, amidst global uncertainties and current subdued inflationary pressures. The move also signalled that the CBSL was supporting the domestic economy.

The CBSL is of the view that successive Monetary Policy decisions have enabled stabilisation of most market interest rates at lower levels, and envisages a further downward adjustment with the May move.

Separately, the CBSL last week announced that with a view to facilitating sustainable revival of businesses that were adversely affected during the recent past, has advised the licenced commercial banks and licenced specialised banks to provide further concessions to those small and medium-sized enterprise (SME) borrowers who commenced discussions for business revival with the respective banks by 31 March 2025. These relief measures are in line with Circular No. 04 of 2024 dated 19 December 2024 on Relief Measures to Assist the Affected SMEs and the Addendum Circular No. 01 of 2025 dated 1 January 2025.

Accordingly, licenced banks have been advised to provide further concessions, including interest reliefs and new lending, to affected borrowers while the timeline given to the licenced banks in Circular No. 04 of 2024 to enter into reschedulement agreements with eligible SME borrowers has been extended from 15 June to 30 June 2025.

Those borrowers who approached the licenced banks for discussions on business revival as specified in the aforesaid Circular may contact the respective banks to obtain further details in this regard, the CBSL added.

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