Regulatory Alerts2018-10-01 | Direction No. 7 of 2018Measures to Curtail Import of Motor Vehicles
The Central Bank of Sri Lanka issued Finance Leasing Act Directions No. 07 of 2018 to curb motor vehicle imports and mitigate adverse exchange rate impacts. Effective 01 October 2018, specialized leasing companies must adhere to strict Loan to Value Ratios that vary by vehicle type, age, and power source. These regulations replace previous directives by capping credit facilities at specific percentages of market value, with lower limits applied to used cars and non-electric vehicles.
CENTRAL BANK OF SRI LANKA
01 October 2018 | FINANCE LEASING ACT DIRECTIONS | No. 07 of 2018
MEASURES TO CURTAIL IMPORT OF MOTOR VEHICLES
Issued under section 34 of the Finance Leasing Act, No. 56 of 2000.
The Central Bank of Sri Lanka with a view to curtailing imports and the resultant adverse impact on the exchange rate requires specialized leasing 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 Leasing 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 specialized leasing 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, DE, 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)
W. Ranaweera Director, Department of Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka