CBSL issues circular to banks on relief to SMEs

On Dec 22, 2024

Central Bank (CBSL) issued a circular to licensed Banks on December 19, highlighting relief measures to be provided to the Small and Medium Enterprises (SMEs) affected due to the Easter Sunday attack, the COVID-19 pandemic and the extraordinary macroeconomic conditions that prevailed during the recent past, as agreed by the Sri Lanka Banks’ Association (Guarantee) Ltd, (SLBA) during the meetings of the Working Committee on Recovery of Loans by Banks (Special Provisions) (Amendment) Act, No. 26 of 2024.

Further, SLBA, while formulating relief measures, was of the view that any suspension of Parate execution will not be beyond 31.03.2025.

Relief measures will only be applicable to credit facilities of SME borrowers of licensed banks that have been classified as Stage 3 (non-performing) on or after 01.04.2019, provided that SMEs initiate discussions with the bank’s Business Revival Units by 31.03.2025, subject to submission of all required documents.

This includes a Reschedulement of impaired loans for eligible SME borrowers will be based on the borrower’s repayment capacity and the submission of an acceptable business revival plan.

All reschedulement agreements with the borrowers are required to be finalized by 15.06.2025 CBSL said.

Eligible SME borrowers with an aggregate capital outstanding of credit facilities below Rs. 25 Mn, between Rs. 25 Mn and Rs. 50 Mn, and above Rs. 50 Mn as of 15.12.2024 are required to commence repayment of their rescheduled loans no later than 31.12.2025, 30.09.2025, and 30.06.2025, respectively.

Unpaid interest (excluding capitalized interest) on the credit facilities of eligible SME borrowers, applicable to the period from 01.04.2019 to 15.12.2024, may be waived off.

Licensed banks were informed to consider providing additional reliefs including the granting of working capital facilities to eligible borrowers, subject to the borrower’s repayment capacity and the submission of credible business revival plans, assessed on a case-by-case basis.

Licensed banks have been requested not to decline new loan applications from eligible borrowers under this scheme solely based on adverse CRIB records.

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