CBSL announces relief measures for people and businesses hit by cyclone and floods

The Central Bank of Sri Lanka (CBSL) has issued a new circular instructing licensed banks to provide a set of relief measures for individuals and businesses affected by the recent cyclonic and flood disasters.

The announcement was made through the Bank Supervision Department on Friday (December 05).

The relief measures, proposed together with the Sri Lanka Banks’ Association (SLBA), aim to support borrowers who have suffered direct income or business losses, while still protecting the stability of the financial system. Affected borrowers must submit their requests, either in writing or electronically by January 15, 2026.

Temporary Debt Relief

Licensed banks have been asked to:

• Suspend capital and/or interest repayments on existing loans for 3 to 6 months, depending on each case.
• Not charge interest above the current contract rate during the suspension period.
• Avoid charging interest on deferred interest payments.

New Loan Facilities

Banks are also encouraged to offer new loans to affected individuals and businesses after assessing their repayment ability.

These loans must follow several guidelines:

• Repayments must begin only after a grace period of at least 3 months following the end of the suspension period.
• Loans with a term of up to 2 years must carry a fixed interest rate no higher than 9% per year, or the borrower’s existing contract rate, whichever is lower.
• Loans with terms longer than 2 years may have their interest rate adjusted after two years, based on the Average Weighted Prime Lending Rate (AWPR).

Fee Waivers Until January 31, 2026

Banks have also been instructed to suspend several charges, including:

• Cheque return fees
• Stop-payment fees
• Late payment fees
• Credit restructuring or modification fees
• Penal interest on any loans

If any of these fees are automatically charged, banks must refund them within three business days.

Clear Communication and Fair Handling

Banks must clearly explain all terms related to loan restructuring, including the breakdown of capital, interest, and other charges, and must obtain the borrower’s consent either in writing or electronically.

If a bank rejects a borrower’s request for relief, it must:

• Provide written reasons for the rejection
• Inform the borrower of the option to appeal to the Director of the Financial Consumer Relations Department of the CBSL

Additionally, banks have been advised not to reject new loan applications solely based on negative CRIB records.

Relief in Addition to Government Support

CBSL stated that these banking relief measures are intended to work alongside the government’s disaster assistance programs, helping people rebuild their livelihoods and supporting businesses to recover quickly.

Affected individuals and businesses are encouraged to contact their banks and apply for the relief before the deadline.