CB extends moratorium on tourism loans by further six months

• Says moratorium extension also applicable to capital outstanding on leasing facilities granted to tourism-related vehicles
• Also instructs to waive off accrued penal interest in respect of leasing facilities granted to such vehicles 

Taking into consideration the potential adverse impact of COVID-19 pandemic on the country’s tourism sector, the Central Bank (CB) has extended the six-month moratorium on loans of tourism sector businesses and individuals by a further six months.

Issuing a circular yesterday, the CB requested all licensed commercial banks, licensed specialised banks, licensed finance companies and specialised leasing companies to extend the debt moratorium for the sector by six months. 

The CB noted that the extension of the moratorium on capital repayments is also applicable to capital outstanding on leasing facilities granted to tourism-related vehicles.“As per the circular, the debt moratorium granted through 2 and 3 of Circular No. 05 of 2020 issued on 27th of March will be extended to 12 months until March 2021,” the circular stated. 

The CB also instructed all financial institutions to waive off the accrued penal interest in respect of leasing facilities granted to tourism related vehicles.However, CB said that financial institutions could recover interest during the moratorium period from eligible borrowers in a manner that is not inconvenient to the borrower.

Earlier, CB officials stressed that both borrowers and financial institutions are required to agree on interest payments while noting that financial institutions don’t have the sole discretion to deicide on interest payments.

The government recently postponed the re-opening of Sri Lanka’s borders for tourists indefinitely, differing earlier plans for a re-opening on August 1.

According  to Sri Lanka Tourism Development Board (SLTDA), tourist arrivals to the country plunged 49.7 percent YoY to 507, 311 in the first six months of this year as authorities suspended tourist arrivals from all countries from March 18 due to COVID-19.