Interest relief program for gold pawn advances amid economic crisis

By Charumini de Silva

The Cabinet of Ministers on Monday approved a program that will grant interest relief on gold pawn advances through the General Treasury. The relief will apply to pawn advances of up to Rs. 100,000 obtained from licenced banks on or before 30 June 2024, with the interest rate capped at a maximum of 10% per annum.

The decision follows a dramatic increase in the pawning of gold jewellery, a trend that reflects the financial desperation faced by many citizens.

“Since 2019, the arrears of pawn advances have surged from Rs. 210 billion to Rs. 571 billion by March 2024, marking a staggering 172% growth. This sharp increase has underscored the urgent need for financial relief for low-income individuals who have resorted to pawning their valuables to cope with the economic downturn,” Cabinet Co-Spokesman and Minister Banduala Gunawardena said.

Speaking at the post-Cabinet meeting media briefing yesterday, he said the Government has identified the necessity of providing assistance to the low-income community burdened by pawn advances. 

“This initiative aims to alleviate the financial strain on individuals who have turned to pawning as a means of surviving the economic crisis. By reducing the interest burden, the Government hopes to provide some relief to those most affected and help stabilise their financial situations,” Gunawardena added.