Maximum interest rate on credit cards reduced to 18%

The Central Bank of Sri Lanka (CBSL) has revised the regulated interest rates for Credit Cards, Pre-arranged Temporary Overdrafts, Pawning Facilities and Penal interest rate over the regular interest rate.

Considering bank lending rates of certain financial products which continue to remain high, the Board decided to revise downward the caps on interest rates on credit cards to 18% per annum, on pre-arranged temporary overdrafts to 16% per annum and on pawning facilities to 10%per annum.

Moreover, the Board was of the view that penal interest rates need to be capped at 2 percentage points over the regular interest rates charged on the relevant credit facility.

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held yesterday (19 August 2020), decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 4.50% and 5.50%, respectively.

The Board recognised the necessity to continue the accommodative monetary policy stance, particularly as market lending rates are yet to reflect the full passthrough of policy easing measures implemented thus far.

The Board decided to adopt targeted measures to reduce specific interest rates that it considered to be excessive, which would help marginal borrowers.

The Board anticipates a further reduction in overall market lending rates, thereby encouraging borrowing for productive economic activity and reinforcing support for COVID- 19 hit businesses as well as the broader economy, given the conditions of subdued inflation.