In a move to strengthen macroprudential policy and reduce systemic financial risks, the Central Bank of Sri Lanka (CBSL) has issued new Directions imposing caps on vehicle loan-to-value (LTV) ratios.
The new regulations, effective from 18 July 2025, apply to all Licensed Commercial Banks, Licensed Specialised Banks, Licensed Finance Companies (LFCs), and Registered Finance Leasing Establishments (RFLEs).
Under the revised guidelines, the maximum financing limit for electric commercial vehicles has been reduced from 90% to 80%.
The LTV cap has also been set at 60% for motor cars, SUVs, and vans; 50% for three-wheelers; and 70% for other types of vehicles.
The CBSL stated that these caps aim to harmonise lending practices across institutions and ensure responsible credit allocation for vehicle purchases.
For registered vehicles used in Sri Lanka for more than one year, the maximum loan-to-value ratio will be 70%.
For unregistered vehicles and those registered for less than one year, further LTV limits will apply as outlined in the new directive.
The CBSL emphasized that these measures are part of a broader strategy to promote financial stability and sustainable lending across the banking and finance sector.
