📈 CBSL Directs Finance Companies to Comply with Vehicle LTV Limits

The Central Bank of Sri Lanka (CBSL) has issued a strict warning to all Licensed Finance Companies (LFCs) against circumventing Loan-to-Value (LTV) limits on motor vehicle financing. • Valuation & Invoice Inflation: CBSL flagged practices where motor vehicle valuations and seller invoices significantly exceeded prevailing market prices, leading to misrepresented asset values and elevated systemic risks. • Strict Compliance Mandate: LFCs are ordered to strictly observe Direction 4.4 of the CBSL Act Directions No. 01 of 2026 to ensure true and fair market valuations for motor vehicle credit facilities. • Bridging Finance Warning: The regulator warned against alternative or bridging finance structures used alongside finance leases, hire purchase agreements, and vehicle loans to bypass prescribed LTV thresholds. • Systemic Stability Focus: CBSL emphasized that macroprudential measures are designed for long-term financial stability, cautioning that short-term profit-driven conduct threatens the broader resilience of the financial sector.