The Ceylon Chamber of Commerce (CCC) yesterday expressed “deep concerns” about the government’s move to suspend parate execution, and called for a collaborative solution to address this growing issue.

The CCC stated that while it understands that certain businesses, essentially in the SME sector need to be supported in the current economic climate, providing that support in the form of curtailing credit recovery measures is not necessarily the best method of supporting these industries.

“The Chamber is concerned about the potential impact on the overall financial market as a result of the cancellation of the parate execution law,” it said in a statement to the media.

Referring to the concerns raised by the Sri Lanka Banks’ Association (SLBA) regarding the suspension’s effect on loan recovery, the CCC noted that this could lead to higher borrowing costs. Essentially due to the increase in risk premiums arising from delays in releasing collateral and the reluctance of the banking sector to lend to genuine, non-defaulting businesses due to the perceived challenges of foreclosure-related to tangible security.

“A robust debt recovery framework is essential for maintaining financial stability and facilitating economic activity,” the CCC said.

The Chamber said that the suspension could provide the SMEs with some breathing room for operations. However, it is crucial to find an amicable solution that is supported by data to ensure this temporary relief doesn’t lead to continued defaults.

Also, the absence of strong debt recovery mechanisms could dry finance to the MSME / SME sectors and other financial costs of lending in addition to driving up the cost of funds, it said.

“We strongly advocate a consultative process that includes the government, private sector, legal experts, and technical advisors, supported by relevant data on loan losses and defaults.  This collaboration will ensure a fair, balanced, and transparent debt recovery framework tailored to Sri Lanka’s specific needs,” the CCC said.

The Ceylon Chamber remains committed to working with all stakeholders towards creating a more inclusive and sustainable approach to financial recovery and business growth. We believe that collaborative efforts and constructive dialogue are essential for achieving balanced solutions that serve the national interest in the long run.