Sri Lanka’s Gold Loan Surge Triggers 70% LTV Cap by CBSL 📈

• Overall Growth: Gold loans in Finance Companies jumped 64.1% YoY in 2025 to Rs. 465 Bn (20.9% of total advances), up from Rs. 43.9 Bn in 2018. Licensed Commercial Banks reached Rs. 898 Bn after adding Rs. 237.7 Bn in 2025. • Regulatory Action: CBSL issued Direction No. 02 of 2026 imposing a 70% Loan-to-Value (LTV) cap on gold-backed credit from 25 May 2026, targeting asset price volatility and systemic risk. • Key Drivers: Rising global gold prices (US$ 3,431/oz avg in 2025) and historical currency devaluation boosted collateral valuations. However, lending growth outpaced indicative rupee gold price gains (64.1% vs 43% in 2025), signaling higher borrowing volume alongside price effects.