Central Bank sets maximum limits on pawning, credit card interest rates

The Central Bank of Sri Lanka (CBSL) says its Monetary Board has decided to impose caps on interest rates on pawning facilities, pre-arranged temporary overdrafts and credit cards for all licensed banks.

Accordingly, the maximum interest rate for pawning facilities is set at 18% per annum, 23% per annum for pre-arranged temporary overdrafts, and 28% per annum for credit cards.

Further, the Monetary Board is of the view that penal interest rates need to be capped at 2 percentage points over the regular interest rates charged on the relevant credit facility, the CBSL said further in its latest Monetary Policy Review.

In addition to the above, the Monetary Board has noted that other market lending interest rates on rupee loans and advances should also adjust downwards further, in line with the relaxed Monetary Policy 5 stance.

The CBSL said directives would be issued shortly to make these regulated interest rates effective. These directions will be subject to further review to ensure that the overall lending interest rate structure remains in line with the monetary policy measures of the CBSL in the period ahead.

The CBSL explained that targeted administrative measures are adopted to reduce specific lending interest rates that its Monetary Board considered to be excessive and direct the licensed banks to reduce overall rupee lending interest rates by an appropriate margin in the period ahead.