Regulatory Alerts2020-04-24 | Finance Leasing Act Directions No. 3 of 2020Amendments to Loan-to-Value Ratio Directions for Motor Vehicle Credit Facilities
The Central Bank of Sri Lanka has amended its Loan-to-Value ratio directions for Specialized Leasing Companies granting credit facilities for motor vehicles. The updated regulations replace prior 2019 directives and establish maximum loan-to-value percentages ranging from 50% to 90%, determined by vehicle category, registration class, and whether the asset is electric or hybrid. Credit facilities for unregistered or recently registered vehicles (under one year) are capped at 90%, while those for older used vehicles are limited to 70% of market value.
CENTRAL BANK OF SRI LANKA 24 April 2020 FINANCE LEASING ACT DIRECTIONS No. 3 of 2020 AMENDMENTS TO DIRECTIONS ON LOAN TO VALUE RATIOS FOR CREDIT FACILITIES GRANTED IN RESPECT OF MOTOR VEHICLES
Issued under Section 34 of the Finance Leasing Act, No.56 of 2000.
The Central Bank of Sri Lanka issues Directions as follows for implementation of loan to value ratios in respect of credit facilities granted by Specialized Leasing Companies (SLCs) for the purpose of purchase or utilisation of motor vehicles.
- The following will replace Directions 1 (i) of the Finance Leasing Act Directions No. 01 of 2019 – Amendments to Directions on Loan to Value Ratios for Credit Facilities Granted in respect of Motor Vehicles.
(i) Credit facilities granted by SLCs 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% |
| Locally Assembled Motor Cars, SUVs and Vans | B (other than light trucks & single cabs) | 90% | 70% |
| 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.
[Signature]
J P Gamalath Director, Department of Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka