Regulatory Alerts2025-08-20 | Direction No. 1 of 2025Central Bank of Sri Lanka Directions on Credit Risk Management for Licensed Microfinance Companies
The Central Bank of Sri Lanka issued Directions No. 01 of 2025 requiring Licensed Microfinance Companies to establish a comprehensive credit risk management framework aligned with their business goals and risk appetite. The regulations mandate specific governance structures, detailed credit appraisal and measurement processes including Expected Credit Loss calculations, and strict prudential limits on lending to individuals, groups, and related parties. These directions become effective on January 1, 2026, with a transitional period for certain governance provisions extending until July 1, 2026.
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