Sri Lanka’s banks became more flexible in lending in 3Q

Sri Lanka’s banking sector was more open to lending for borrowers in retail, corporate, and SME categories in the third quarter of the year amidst improved risk perception and improved liquidity

However, due to the impacts from the second wave of COVID-19 on the credit supply, the Central Bank (CB) expects the banks to become more conservative in lending in the current (Q4) quarter.

In the third quarter, the demand for loans was significantly up across all categories driven by the sharp reduction in interest rates.

“Loans demanded by the corporate category for the purposes of working capital and debt restructuring showed an increase in 2020 Q3,” CB said.

Meanwhile, the CB expects the demand for loans to increase further in Q4 with the optimism prevailed on the recovery of economic activities.

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