Regulatory Alerts2020-04-24 | Finance Business Act Directions No. 3 of 2020Amendments 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. 3 of 2020 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 whether the vehicle is electric, hybrid, or other. These ratios apply to both new and used vehicles, with distinct limits set for vehicles registered for less than or more than one year in Sri Lanka.
MONETARY BOARD CENTRAL BANK OF SRI LANKA 24 April 2020 FINANCE BUSINESS 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 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 1 (i) of the Finance Business Act Directions No.02 of 2019 – Amendments to Directions 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.
(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) Prof. W D Lakshman Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka