Press briefing of Cabinet Decision taken on 2024-02-26 (Subject to Confirmation at the next Meeting)

Amendment to the Recovery of Loans by Banks (Special Provisions) Act, No.4 of 1990

- Due to the economic downturn prevailing over last 3 years, large scale, medium scale and small scale local businessmen have to encounter severe difficulties in running their businesses. Currently, the economy is getting stronger again to some extent and the necessary initial steps for that are being taken by the General Treasury. Nevertheless, various parties have pointed out that there are issues with regard to paying off the loans obtained by the small and medium scale businessmen from the banks in the past for their business activities. In this backdrop, banks are taking action to take over and auction the properties of a significant number of businessmen following the existing legal provisions, due to the default of loans by them. It has been observed that it would be appropriate to provide some grace period for the payment of the relevant loans alleviating the crisis situation that may arise in the business sector so as not to prejudice the banking system. Accordingly, the proposal made by the Hon. President in his capacity as the Minister of Finance, Economic Stabilization and National Policies to temporarily suspend the methodology adopted by banks to take over the properties of debtors due to the default of loans up to 2024‑12‑15 and to amend section 4 of the Recovery of Loans by Banks (Special Provisions) Act, No.4 of 1990 to impose necessary legal provisions in that regard, was approved by the Cabinet.