CBSL announces relief measures to assist troubled SMEs

The Central Bank of Sri Lanka (CBSL) on Friday issued a Circular to Licenced Banks, highlighting relief measures to be provided to the Small and Medium Enterprises (SMEs) affected due to the Easter Sunday attack, COVID-19 pandemic, and the extraordinary macroeconomic conditions that prevailed during the recent past.

The CBSL said the move is an agreement with the Sri Lanka Banks’ Association (Guarantee) Ltd. (SLBA) during the meetings of the Working Committee on Recovery of Loans by Banks (Special Provisions) (Amendment) Act, No. 26 of 2024.

Further, the SLBA, while formulating relief measures, was of the view that any suspension of Parate execution will not be beyond 31 March 2025.

The salient features of the relief measures are as follows:

a. Relief measures will only be applicable to credit facilities of SME borrowers of licenced banks that have been classified as Stage 3 (non-performing) on or after 1 April 2019, provided that SMEs initiate discussions with the bank’s Business Revival Units by 31 March 2025, subject to submission of all required documents.

b. Rescheduling of impaired loans for eligible SME borrowers will be based on the borrower’s repayment capacity and the submission of an acceptable business revival plan.

c. All rescheduling agreements with the borrowers are required to be finalised by 15 June 2025.

d. Eligible SME borrowers with an aggregate capital outstanding of credit facilities below Rs. 25 million, between Rs. 25 million and Rs. 50 million, and above Rs. 50 million as of 15 December 2024 are required to commence repayment of their rescheduled loans no later than 31 December 2025, 30 September 2025, and 30 June 2025, respectively.

e. Unpaid interest (excluding capitalised interest) on the credit facilities of eligible SME borrowers, applicable to the period from 1 April 2019 to 15 December 2024, may be waived as follows:

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f. Licenced banks were informed to consider providing additional reliefs, including the granting of working capital facilities, to eligible borrowers, subject to the borrower’s repayment capacity and the submission of credible business revival plans, assessed on a case-by-case basis.

g. Licenced banks have been requested not to decline new loan applications from eligible borrowers under this scheme solely based on adverse CRIB records.

h. In the event of a rejection or dispute regarding the provision of reliefs, licenced banks were informed to make the borrower aware of the reasons for such rejection or dispute and to advise the borrower that there is an opportunity to appeal the decision to the Director of the Financial Consumer Relations Department at the CBSL.

i. Licenced banks are required to provide eligible borrowers with a breakdown of the capital, interest, and other charges of their credit facilities upon request.

The CBSL requested both licenced banks and concerned borrowers to effectively collaborate to ensure the consistent application of these relief measures. Accordingly, eligible borrowers are requested to contact the respective licenced banks with relevant information and documents to discuss and agree on repayment plans. Borrowers are expected to commence repayment as agreed with the banks, as non-repayment of loan obligations for a longer period would result in unwarranted strains on both banks and borrowers.

Further details on relief measures can be obtained from Circular No. 4 of 2024 on “Relief Measures to Assists the Affected Small and Medium Enterprises”, which can be accessed through the following link: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/cdg/bsd_circular_no_4_of_2024_e.pdf