CBSL monitoring if bank lending rates are adequately lowered

The Central Bank of Sri Lanka (CBSL) is conducting special monitoring to determine if the lending rates have been adequately reduced by licensed commercial banks, Finance State Minister Ranjith Siyambalapitiya says.

The lawmaker acknowledged the fact that the banking system is faced with numerous practical issues when lowering the lending rates.

In late July, the CBSL governor had urged the licensed commercial banks to take immediate measures to adequately reduce lending rates in view of the policy interest rate cuts.

Dr. Nandalal Weerasinghe, in a letter directed to the Sri Lanka Banks’ Association (SLBA) chairman, had emphasized that the Central Bank would be compelled to take administrative measures in the event the banking and financial sector fails to take adequate and expeditious adjustments in this regard.

Pointing out that the CBSL has recently dropped the policy interest rates by 450 bps on two occasions with a view to enabling the economy to reach its potential while stabilizing inflation at mid-single digit levels in the medium term and easing pressures in the financial markets, Dr. Weerasinghe had said it is thus expected that market interest rates – particularly lending rates – would adjust downwards “adequately and swiftly”.