Regulatory Alerts2021-01-13 | Circular No. 1 of 2021Suspension of Recovery Actions Against Small and Medium Enterprises (SME) Paddy Millers
The Central Bank of Sri Lanka has directed licensed commercial and specialized banks to suspend recovery actions against small and medium enterprise paddy millers for six months, effective from 1 January 2021. Banks must defer new recovery resolutions and halt asset auctions until 30 June 2021, provided borrowers reach debt repayment agreements or submit court affidavits confirming compliance. This suspension applies to all ongoing legal proceedings and recovery measures initiated under the Recovery of Loans by Banks Act, Mortgage Act, or Finance Leasing Act.
MONETARY BOARD CENTRAL BANK OF SRI LANKA
13 January 2021 | CIRCULAR | No. 01 of 2021
SUSPENSION OF RECOVERY ACTIONS AGAINST SMALL AND MEDIUM ENTERPRISE (SME) PADDY MILLERS
Considering the Government initiatives to support the SME Paddy Millers amidst COVID 19 pandemic for the upcoming harvesting seasons, licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks), are required to suspend recovery actions against SME Paddy Millers for a period of six months commencing from 1 January 2021 as specified below.
(1) In the case where a licensed bank has commenced or given notice of recovery action under the provisions of the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990 or Mortgage Act No. 06 of 1949 as amended or Finance Leasing Act No. 56 of 2000 or any other relevant Act in this regard, such recovery actions shall be suspended on condition that the concerned licensed bank and the borrower reach a debt re-payment agreement.
(2) Licensed banks shall defer passing new resolutions under the above Acts, for recovery of loans and advances. In instances where resolutions for recovery have already been passed, auctioning of assets will be suspended until 30.06.2021.
(3) In instances where there are on-going litigations in courts relating to recovery, borrowers will be permitted to enter into an agreement by submission of affidavit to Courts agreeing to comply with the requirements set out in (1) above.
(4) Licensed banks shall suspend any other legal or recovery action until 30.06.2021.
(Signature) Prof. W D Lakshman Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka