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Central Bank imposes a “credit ceiling” on Banks

Posted by author 2 years, 5 months ago on Feb 3rd, 2012 10:14 AM and filed under Economy. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

CBSL imposes a credit ceiling on banks

( Sri Lanka along with its latest rate hike also has imposed a ceiling on the disbursement of credit by Commercial banks during the year 2012 in a bid to keep a tab on the credit growth in the economy.

The directive request the Commercial banks to take steps to ensure that their  overall credit growth in 2012 will not exceed 18% of Bank’s respective loan book outstanding at the end of 2011.

The Central Bank says, a credit growth of up to 23% will be allowed for those banks, which finance the excess of up to 5% of the credit growth from the funds mobilized from overseas.

The move also comes as the Central bank announced today that the credit granted by commercial banks to the private sector has increased by 34.5% year on year during December 2011, substantially exceeding projections.

It says, Import related credit in Sri Lanka has increased by over 34% during 2011, while the credit for exports only has seen a growth of 8% during the year.

This situation also has resulted in Sri Lanka’s foreign reserves declining to US$ 5.9 billion by end December 2011, as the Central Bank had to intervene by supplying foreign exchange, on a net basis, to mitigate the undue pressure on the domestic foreign exchange market.

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