By The Central Bank (CB) on Tuesday further cut interest rates by 0.5 per cent as the country’s economic situation improved.
A statement from the banking regulator said the CB’s Monetary Policy Board at its meeting held on March 25 decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points (bps) to 8.50 per cent and 9.50 per cent, respectively.
Removing Price Controls
Sri Lanka’s central bank said it is removing price controls on rupee lending rates from April 01, amid continued falls in market rates.
The central bank said the price control order on rupee denominated lending products issued in August 2023 “contributed to reducing the overall market lending interest rates and therefore yielded the expected results.”
Revival Units
Sri Lanka’s banks will be directed to formally set up business revival units that will help re-structure companies whose loans have gone bad, the central bank said.
Business revival units were required to be set up initially during the covid pandemic, but now they will be made a permanent service of banks.
“We hope to issue a directive next month, for banks to set up BRUs which will help guide and strengthen small and medium enterprises,” Governor Weerasinghe told reporters Tuesday.
Reserves High
Sri Lanka’s end-march foreign exchange reserves will be much higher than the end February number as the central bank has been heavily buying US dollars from the market, the Central Bank Governor said.
The Gross official reserves improved to $4.5 billion by end February 2024 including a $1.4 billion swap facility from the People’s Bank of China.
