Regulatory Alerts2017-06-02 | Finance Leasing Act Direction No. 3 of 2017Amendment to Directions on Loan to Value Ratios for Motor Vehicle Credit Facilities
The Central Bank of Sri Lanka issued Finance Leasing Act Directions No. 03 of 2017 to amend the Loan to Value (LTV) ratios for credit facilities granted for vehicle purchases. The directive updates interpretations of credit facilities and establishes specific LTV limits based on Department of Motor Traffic vehicle categories, setting ratios at 90% for commercial vehicles, 50% for motor cars and SUVs, 25% for three-wheelers, and 70% for other vehicles. These changes replace previous provisions in Directions No. 02 of 2017 to regulate financing terms for end-users acquiring vehicles.
CENTRAL BANK OF SRI LANKA
02 June 2017 | FINANCE LEASING ACT DIRECTIONS | No. 03 of 2017
AMENDMENT TO DIRECTIONS ON THE LOAN TO VALUE RATIOS FOR CREDIT FACILITIES IN RESPECT OF MOTOR VEHICLES
The Directions 5.1 and 5.4 of the Finance Leasing Act Directions No. 02 of 2017 on Amendment to Directions on the Loan to Value Ratios for Credit Facilities in Respect of Motor Vehicles are amended by replacing the following:
- Interpretations
5.1 Credit facilities shall mean finance leases, hire purchase facilities and all other credit facilities granted for the purpose of purchase or utilisation of vehicles by end-users.
5.4 The vehicle classes provided by the Department of Motor Traffic (DMT) may be categorized for the purpose of the Direction as in Table 1 below:
Table 1 – Categorization of DMT Vehicle Classes
| Vehicle Category | Vehicle Class of DMT | LTV |
|---|---|---|
| Commercial vehicles | C1, C, CE, D1, D, DE, G1, G, J | 90% |
| Motor Cars, SUVs and Vans | B (other than light trucks & single cabs) | 50% |
| Three wheelers | B1 | 25% |
| Any other vehicle | A1, A, light trucks & single cabs categorized under B | 70% |
(Signature)
U. P. Alawattage Director, Department of Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka