All Parate Executions have been suspended until 15 December 2024, as per a Cabinet decision made on Monday (26 Feb.).

The relevant proposal was furnished by President Ranil Wickremesinghe, in his capacity as the Minister of Finance, following a request made by Justice Minister Wijeyadasa Rajapakshe and Minister of Industries Ramesh Pathirana.

Accordingly, the relevant amendments are due to be presented before the Parliament soon.

State Minister of Finance Ranjith Siyambalapitiya had informed Parliament last week that steps will be taken to suspend the powers of the ‘Parate execution’ law for a certain period for the purpose of protecting small- and medium-scale entrepreneurs (SMEs).

As per the Cabinet’s decision, the banks’ practice of acquiring properties of whose loans are yet to be paid off will be suspended until 15 December 2024 and Section 4 of the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 will be amended to facilitate the necessary legal provisions.

The government has observed that large-, medium- and small-scale businesspeople in the country had to face numerous constraints to maintain their businesses during the economic hardships that prevailed over the past 3 years.

The economy has revived to some extent now, however, certain issues still exist pertaining to paying off the loans obtained from the banks for the medium- and small-scale businesses.

Under such circumstances, adhering to existing legal provisions, banks have been acquiring properties of a considerable number of businessmen due to non-payment of loans and subsequently auctioning them.

For this reason, the government says a sufficient grace period should be granted to pay off the loans without being a burden to the banking system.

In light of this, the Cabinet of Ministers has granted the approval to the proposal tabled by the President to put a temporary halt to the acquisition of properties of loan defaulters by banks and to amend the Recovery of Loans by Banks (Special Provisions) Act.