Regulatory Alerts2018-09-28 | Banking Act Directions No. 6 of 2018Measures to Curtail Import of Motor Vehicles
The Central Bank of Sri Lanka has directed licensed commercial and specialised banks to implement new Loan-to-Value ratios ranging from 50% to 90%, depending on vehicle type and registration age, effective 1 October 2018. Concurrently, banks must suspend opening letters of credit for motor vehicle imports under the government's concessionary permit scheme until further notice. These measures aim to curb excessive motor vehicle imports and mitigate their adverse impact on the national exchange rate.
28 September2018 ,ffi CENTRAL BAITK OF SRI LAI\KA BAI\IK ST'PERVISION DEPARTMENT BAI\IKING ACT DIRECTIONS No.06 of2018 MEASURES TO CURTAIL IMPORT OF MOTOR YEHICLES Issued under Sections a6(l) and 76(J) (1) of the Banking Act, No. 30 of 1988, as amended. The Central Bank of Sri Lanka with a view to curtailing imports and the resultant adverse impact on the exchange rate requires licensed commercial banks and licensed specialised banks to adopt the following measures with effect from 0l October 2018.
- The following will replace Directions 2.1 of the Banking Act Directions No. 0l of 2018 on Loan to Value Ratios for Credit Facilities Granted in respect of Motor Vehicles. Credit facilities granted by every licensed bank for the purpose of pruchase or utilisation of motor vehicles shall not exceed the following percentages of the market value of such vehicles until further notice. (i) In respect of unregistered vehicles which have been used in Sri La$ka for less than one yeax after the first regisfration; Table I - Loan to Value Ratio Commercial vehicles cl, c, cE, Dl, D, DE, Gl, G, J 9oo/o 90% Motor Cars, SUVs and Vans B (other than light trucks & sinsle cabs) 90% 50o/o Three wheelers B1 90o/o 25o/o Any other vehicle A1, A,lighttrucks & single cabs categorized under B 90o/o 70o/o Hybrid Motor Cars, Vans and SUVs B (other than light uucks & sinsle cabs) 50% (ii) 70 per cent in respect of registered vehicles which have been used in Sri Lanka for more than one year after the fust registration.
- Refrain from opening of letters of credit for importation of motor vehicles under the scheme for issuance of motor vehicle permits on concessionary terms issued by the Govemment of N-.---= Chief Executive Oficer/Senior Deptty Governor of the Central Bank of Sri Lanka, Sri Lanka until further notice.