🛡️ CBSL Tightens Vehicle Loan Limits to Curb Imports & Financial Risk

• The Central Bank of Sri Lanka (CBSL) has reduced maximum Loan-to-Value (LTV) ratios for vehicle financing, effective 8 November 2025, as a macro-prudential measure to manage credit growth. • The decision aims to ensure prudent lending and follows the external sector recording its first current account deficit of 2025 in September, driven by soaring vehicle imports. • Key LTV Changes: • Commercial Vehicles: Reduced to 70% (down from 80%). • Motor Cars, Vans, & SUVs: Reduced to 50% (down from 60%). • Financing for other vehicle types is now 50% (down from 70%); three-wheelers remain capped at 50%. • Import & Sector Impact: • Vehicle imports surged to US$ 286 Mn in September, bringing the 9-month total to US$ 1.2 Bn. • CBSL has revised the 2025 vehicle import forecast upward to US$ 1.5 Bn. • Vehicle loans currently account for over 63% of the total loan portfolio of the finance company sector. • Transitional provisions apply to vehicles imported under Letters of Credit (LCs) opened prior to the new direction date.