President Anura Kumara Dissanayake announced in Parliament that the suspension of the parate execution law, which permits banks to auction collateral on defaulted loans, will be extended until March 2025.
Initially, the law was set to be suspended until 15th of December 2025, after receiving conditional approval from the Committee on Public Finance (COPF) under the previous government.
The extension by three and a half months was made in response to concerns from Sri Lanka’s banks, regulators, and small and medium enterprises (SMEs) about loan repayment difficulties and the law’s potential impact on struggling businesses.
However, President Dissanayake warned that a full suspension could create challenges for banks and financial institutions, emphasizing the need to balance support for SMEs with safeguarding the banking system.
He also revealed that the total outstanding debt in the country amounts to Rs. 1,385 billion, involving 752,886 debtors, with 99% of them having loans under Rs. 25 million.
“Defaulters with loans below Rs. 25 million will have the opportunity to restructure their debt until 12th of December 2025, provided they present a debt restructuring plan to their banks by March,” he stated.
