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Jun 17, 2020

CBSL swiftly responds after president's criticism

The Central Bank has announced that it will implement new credit schemes to support the revival of the country’s economy.

“Growth of the Sri Lankan economy has fallen to dismal levels over the past few years,” the CBSL said in a statement on Tuesday.

It added that the impact of the COVID-19 pandemic may result in severe stress on economic and financial system stability in the country.

The CBSL noted that it will provide funding to licensed commercial banks in addition to the Rs 27.5 billion disbursed under the refinance scheme.

Funding would be granted at the concessionary rate of one per cent on the condition that commercial banks will on-lend to domestic businesses at four per cent.

“This scheme along with the existing refinance Scheme will provide Rs. 150 billion in total to the businesses affected by the COVID-19 pandemic,” the statement read.

Under the new credit scheme, construction sector enterprises will be allowed to borrow from banks using guarantees issued by the government equivalent to the amount due on contracts carried out in the past.

The bank also decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of licensed commercial banks (LCBs) by 200 basis points to 2.00 per cent, with effect from the reserve maintenance period that commenced on 16 June 2020.

The measures follow president Gotabaya Rajapaksa's severe criticism of CBSL officials yesterday.

Criticism

“The Central Bank has not put forward a single proposal to rebuild the economy. The Government owes a large sum of money to various institutions for the services and products they supplied during the past couple of years. The Central Bank has ignored the proposal made to provide Rs. 150 billion to banks by accepting the outstanding due as collateral. The Government will have to take the blame for the economic slowdown due to this serious negligence of duty on the part of the Central Bank,” the President said.

(Footage courtesy : newsfirst)

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