Regulatory Alerts2018-10-01 | Direction No. 9 of 2018Measures to Curtail Import of Motor Vehicles
The Central Bank of Sri Lanka issued Directions No. 09 of 2018 under the Finance Business Act to curb motor vehicle imports and mitigate adverse exchange rate impacts. Effective 1 October 2018, licensed finance companies must adhere to strict Loan to Value Ratios that vary by vehicle type, age, and power source, with electric vehicles generally permitted higher leverage than other categories. These measures replace previous guidelines by capping credit facilities at specific percentages of market value, ranging from 25% for older non-electric three-wheelers to 90% for commercial and new electric vehicles.
MONETARY BOARD CENTRAL BANK OF SRI LANKA
01 October 2018 | FINANCE BUSINESS ACT DIRECTIONS | No. 09 of 2018
MEASURES TO CURTAIL IMPORT OF MOTOR VEHICLES
Issued under section 12 of the Finance Business Act, No. 42 of 2011.
The Central Bank of Sri Lanka with a view to curtailing imports and the resultant adverse impact on the exchange rate requires licensed finance companies to adopt the following measures with effect from 01 October 2018.
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The following will replace Directions 2.1 of the Finance Business Act Directions No. 02 of 2018 on Loan to Value Ratios for Credit Facilities Granted in respect of Motor Vehicles. Credit facilities granted by every licensed finance company for the purpose of purchase 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 and registered vehicles which have been used in Sri Lanka for less than one year after the first registration;
Table 1 – Loan to Value Ratio
| Vehicle Category | Vehicle Class of Department of Motor Traffic | Electric Vehicles | Other |
|---|---|---|---|
| Commercial vehicles | C1, C, CE, D1, D, G1, G, J | 90% | 90% |
| Motor Cars, SUVs and Vans | B (other than light trucks & single cabs) | 90% | 50% |
| Three wheelers | B1 | 90% | 25% |
| Any other vehicle | A1, A, light trucks & single cabs categorized under B | 90% | 70% |
| Hybrid Motor Cars, Vans and SUVs | B (other than light trucks & single 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 first registration.
(Signature)
Dr. Indrajit Coomaraswamy Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka