Friday Nov 15, 2024
Friday Nov 15, 2024
Friday, 17 April 2020 00:00 - - {{hitsCtrl.values.hits}}
The Central Bank yesterday reduced the Bank Rate by 500 basis points from 15% to 10% to aid in efforts to counter the impact of COVID-19 on the economy.
the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 15 April, having observed the cumulative reduction of the key policy interest rates of the Central Bank, namely the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), by 200 basis points each since 31 May 2019, decided to allow the Bank Rate to automatically adjust in line with the SLFR, with a margin of +300 basis points.
“Accordingly, with effect from 16 April 2020, the Bank Rate, which is an administratively determined rate that could be used in periods of emergency, has been effectively reduced by 500 basis points from 15.00% to 10.00%,” the Central Bank said in a short statement.
In mid-March, the Central Bank hurriedly decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 25 basis points to 6.25% and 7.25%, respectively, with effect from 17 March.
It also decided to reduce the Statutory Reserve Ratio (SRR) on all rupee deposit liabilities of licensed commercial banks (LCBs) by 1.00 percentage point to 4.00%, with effect from the current reserve maintenance period.
At the time, the Monetary Board said it arrived at this decision in consideration of the urgent need to support economic activity with the rapid global spread of the COVID-19 pandemic and its possible further spread in Sri Lanka.
In January, the Central Bank reduced policy rates by 50 basis points effective 30 January. It has also issued multiple guidelines and regulatory changes facilitating the implementation of the credit support package for borrowers in both performing and non-performing categories and the implementation of a credit guarantee scheme to revive non-performing advances, while maintaining the dialogue with the financial market to ensure market lending rates continue to decline in line with the Monetary Law Act Order No. 02 of 2019.
Non-Banking Financial Institutions (NBFIs) and Licensed Finance Companies have also been given fresh guidelines and regulations to increase their support towards small and medium enterprises and encourage economic activities.
