Ceylon Chamber Calls for Collaborative Solutions on Debt Recovery Framework

The Ceylon Chamber of Commerce is deeply concerned about the decision by the Cabinet of Ministers to
temporarily suspend the parade execution law. While we understand that certain businesses essentially in
the SME sector need to be supported in the current economic climate, providing that support in the form
of curtailing credit recovery measures is not necessarily the best method of supporting these industries.
The Chamber is concerned about the potential impact on the overall financial market as a result of the
cancellation of the parate execution law.

The Chamber acknowledges the concerns raised by the Sri Lanka Banks Association (SLBA) regarding
the suspension’s effect on loan recovery. This, in turn, could lead to higher borrowing costs due to the
increase in risk premiums arising from delays in releasing collateral and the reluctance of the banking
sector to lend to genuine, non-defaulting businesses due to the perceived challenges of foreclosure-related to tangible security. A robust debt recovery framework is essential for maintaining financial stability and facilitating economic activity.

The Chamber recognizes the critical role of Sri Lanka’s MSME / SME sectors, startups, and
entrepreneurs. These businesses are driving the economy in terms of job creation, innovation, and
diversification. The temporary suspension can provide them with some breathing room for operations.
However, it is crucial to find an amicable solution that is supported by data to ensure this temporary relief
doesn’t lead to continued defaults.

Also, the absence of strong debt recovery mechanisms could dry finance to the MSME / SME sectors and
other financial costs of lending in addition to driving up the cost of funds.

Therefore, the Ceylon Chamber strongly advocates a consultative process that includes the government, private sector, legal experts, and technical advisors, supported by relevant data on loan losses and defaults.

“This collaboration will ensure a fair, balanced, and transparent debt recovery framework tailored to Sri Lanka’s specific needs,” Ceylon Chamber said.

The Ceylon Chamber remains committed to working with all stakeholders towards creating a more
inclusive and sustainable approach to financial recovery and business growth. We believe that
collaborative efforts and constructive dialogue are essential for achieving balanced solutions that serve
the national interest in the long run.