CBSL Imposes Stricter Loan Limits on Gold and Vehicle Financing

Fitch Ratings has stated that Sri Lanka's stricter macroprudential restrictions on vehicle and gold-backed lending will benefit lenders’ risk profiles, particularly those of finance companies. The agency noted that these products, which have expanded rapidly, represent a substantial share of finance companies’ balance sheets. However, Fitch also cautioned that the tighter caps may weigh on volumes and earnings growth, especially for lenders with high exposure to these sectors.

The Central Bank of Sri Lanka (CBSL) has further tightened regulations on vehicle financing, reducing the maximum loan-to-value ratio by 10% for all vehicle purchases. For commercial vehicles, the new maximum LTV is 60% (down from 70%), and for private vehicles, it is 40% (down from 50%). The existing directive for gold collateral, imposing a maximum loan-to-value ratio of 70%, remains in effect from May 25, 2026.

The Central Bank of Sri Lanka (CBSL) has introduced a maximum loan-to-value ratio of 70% for loans secured by gold collateral. This directive, effective May 25, 2026, aims to ensure financial system stability and manage risks, citing significant recent growth in gold-backed loans. The measure applies to all licensed commercial banks, specialized banks, and finance companies.