Regulatory Alerts2019-06-04 | Finance Business Act Direction No. 2 of 2019Amendments to Directions on Loan to Value Ratios for Credit Facilities Granted in Respect of Motor Vehicles
The Central Bank of Sri Lanka issued Directions No. 2 of 2019 to regulate loan to value ratios for motor vehicle credit facilities granted by Licensed Finance Companies. The directive establishes specific maximum lending percentages based on vehicle type, registration status, and fuel classification, while mandating that concessionary imports be valued based on proforma invoices. Additionally, the previous Directions No. 09 of 2018 concerning motor vehicle import curtailment measures were withdrawn effective immediately.
MONETARY BOARD CENTRAL BANK OF SRI LANKA 04 June 2019 FINANCE BUSINESS ACT DIRECTIONS No. 2 of 2019 AMENDMENTS TO DIRECTIONS ON LOAN TO VALUE RATIOS FOR CREDIT FACILITIES GRANTED IN RESPECT OF MOTOR VEHICLES
Issued under Section 12 of the Finance Business Act, No.42 of 2011.
The Central Bank of Sri Lanka issues Directions as follows for implementation of loan to value ratios in respect of credit facilities granted by Licensed Finance Companies (LFCs), for the purpose of purchase or utilisation of motor vehicles.
- 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.
(i) Credit facilities granted by LFCs 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.
(a) 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% |
| Light trucks | B | 90% | 90% |
| Any other vehicle | A1, A and single cabs categorized under B | 90% | 70% |
| Hybrid Motor Cars, Vans and SUVs | B (other than light trucks & single cabs) | 50% |
(b) 70 per cent in respect of registered vehicles which have been used in Sri Lanka for more than one year after the first registration.
MONETARY BOARD CENTRAL BANK OF SRI LANKA 04 June 2019 FINANCE BUSINESS ACT DIRECTIONS No. 2 of 2019
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Loan to Value Ratio for credit facilities granted for importation or purchase of motor vehicles under permits on concessionary terms shall be computed based on the proforma invoice value, instead of the market value of the motor vehicle.
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The Finance Business Act Directions No. 09 of 2018 dated 01.10.2018 on Measures to Curtail imports of Motor Vehicles is withdrawn with effect from the date of this Directions.
(Signature)
Dr. Indrajit Coomaraswamy Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka