Regulatory AlertsSri Lanka: lending & credit regulation
RegulatedLending via CBL license; no specific fintech credit regime; BNPL/P2P unregulated
- Lead regulator
- Central Bank of Sri Lanka
- Also involved
- Companies Registry (incorporation) · IRD (tax)
- Core law
- Finance Business Act No. 30 of 1988
- Entry capital
- LKR 100m (Finance Company)
- Approval timeline
- 6-12 months
- Customer assets
- Segregated per CBL prudential directions
- Data protection
- Personal Data Protection Act No. 9 of 2022 · PDPC
- Sandbox
- No
Consumer and SME lending is strictly regulated under the Finance Business Act, requiring a license from the Central Bank of Sri Lanka (CBL). The CBL supervises Licensed Finance Companies (LFCs) and Licensed Microfinance Companies (LMFCs). There is currently no specific regulatory framework for digital-only P2P lending or Buy-now-pay-later (BNPL) products, leaving them in a grey area or unregulated.
Which licence do you need?
| Your activity | Requirement | Capital | Timeline | Authority |
|---|---|---|---|---|
| Consumer lending | LicenceFinance Company License[1] Requires CBL license under Finance Business Act; strict prudential rules. | LKR 100m | 6-12 months | Central Bank of Sri Lanka |
| SME / commercial lending | LicenceFinance Company License[2] LFCs can lend to SMEs; subject to large exposure and credit risk limits. | LKR 100m | 6-12 months | Central Bank of Sri Lanka |
| Microfinance | LicenceLicensed Microfinance Company[3][4] Specific license for microfinance; loan cap of LKR 250,000 per borrower. | LKR 25m | 6-12 months | Central Bank of Sri Lanka |
| Buy-now-pay-later | Uncertainverify with regulator No specific BNPL regulation; may fall under general lending or e-commerce. | — | — | — |
| P2P lending platform | Uncertainverify with regulator No specific P2P lending framework; unregulated or requires general license. | — | — | — |
| Credit bureau / scoring | Unregulated[5] Credit bureaus operate commercially; no specific licensing for scoring models. | — | — | — |
| Debt collection | Uncertainverify with regulator General business license required; specific collection conduct rules unclear. | — | — | — |
New — what changed recently
- 2025-07-17Motor Vehicle LTV Directions — CBL imposed max LTV caps (60% for cars) on motor vehicle credit facilities for banks and finance companies.
- 2025-01-01Interest Rate Caps Amendment — CBL updated maximum interest rates for finance companies, mandating quarterly reviews based on Treasury Bill yields.
- 2024-05-03Credit Risk Management Directions — CBL mandated comprehensive credit risk management frameworks for all licensed Finance Companies.
Market-entry checklist
- 1Incorporate companyRegister with Companies Registry and obtain tax clearance from IRD.
- 2Apply for CBL licenseSubmit application for Finance Company or Microfinance license to CBL with LKR 100m or LKR 25m capital.
- 3Establish risk frameworkImplement CBL-mandated credit risk management and governance structures.
- 4Comply with LTV rulesAdhere to specific Loan-to-Value caps for vehicle and property lending.
Sources
- Amendments to Basel III Capital Requirements Directions for Licensed Commercial and Specialised Banks · 2026-05-27
- Large Exposures of Licensed Banks · 2024-03-25
- Central Bank of Sri Lanka Directions on Credit Risk Management for Licensed Microfinance Companies · 2025-08-20
- Maximum Interest Rate on Microfinance Loans granted by LMFCs · 2022-06-10
- Removal of ICRA Lanka Ltd. as an acceptable Credit Rating Agency · 2023-02-02