Regulatory Alerts2017-05-31 | Banking Act Directions No. 4 of 2017Amendment to Directions on Loan-to-Value Ratios for Motor Vehicle Credit Facilities
The Central Bank of Sri Lanka amends Banking Act Directions 5.1 and 5.4 to establish updated loan-to-value (LTV) ratios for motor vehicle credit facilities, explicitly defining these facilities to encompass finance leases and hire purchase arrangements for end-users. The revised framework assigns specific LTV caps according to Department of Motor Traffic classifications, mandating 90 percent for commercial vehicles, 50 percent for motor cars, SUVs and vans, 25 percent for three-wheelers, and 70 percent for all other vehicle categories. These standardized ratios directly regulate the maximum loan amounts financial institutions may extend across distinct vehicle classes to mitigate credit risk.
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