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Maximum Loan-to-Value (LTV) Ratios
Updated LTV limits for various credit facilities as per CBSL guidelines.
Primary Sources
CBSL tightens Loan to Value ratio for credit granted for vehicles
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CBSL tightens Loan-to-Value ratios for vehicle loans from today
The Central Bank of Sri Lanka (CBSL) states that the decision to limit Loan-to-Value (LTV) ratios for motor vehicles has come into effect from today (25). The Governing Board of the CBSL has tightened the maximum Loan-to-Value (LTV) ratios applicable to credit facilities granted for motor vehicles and has also introduced a maximum LTV ratio for credit facilities secured by gold, effective from today (25). These measures were taken by the CBSL in line with its macroprudential authority to promote prudent lending practices, safeguard the resilience of financial institutions, and mitigate the potential build-up of systemic vulnerabilities, the Central Bank said in a statement. The CBSL noted that, in arriving at these decisions, the Governing Board considered the recent significant growth in credit extended through facilities secured by gold and motor vehicle financing, as well as the potential impact on the financial system if such trends continue at the current pace. It added that heightened uncertainties stemming from evolving geopolitical and geoeconomic developments have increased volatility in asset prices, including gold, alongside recent exchange rate fluctuations. “The temporary increase in the surcharge on vehicle imports and exchange rate movements could temporarily inflate vehicle prices. Such fluctuations may affect collateral valuations and alter the underlying credit risk profiles, while continued rapid credit expansion warrants intervention to prevent a potential build-up of excessive risks within the financial system,” the CBSL noted. Accordingly, a maximum LTV ratio of 70% has been introduced for credit facilities secured by gold collateral granted by Licensed Banks and Licensed Finance Companies, including existing credit facilities that are renewed on or after the effective date. Moreover, the existing maximum LTV limits applicable to credit facilities granted for motor vehicles have been tightened by 10 percentage points. Accordingly, from today (25), the CBSL will impose the following maximum LTV ratios on vehicle loans for unregistered vehicles and vehicles used in Sri Lanka for less than one year after first registration: • 60% for commercial vehicles • 40% for cars, SUVs, vans, three-wheelers, and other vehicles.
CBSL imposes strict caps on vehicle loans and leases effective May ...
The Central Bank of Sri Lanka (CBSL) has issued a new directive introducing strict maximum caps on Loan-to-Value (LTV) ratios for credit facilities granted for the purchase or utilization of motor ...
CBSL tightens LTV ratio on vehicle financing and gold-backed loans
The Central Bank of Sri Lanka (CBSL) yesterday announced that its Governing Board has decided to introduce a maximum loan-to-value (LTV) ratio for credit facilities applicable to motor vehicle financing and loans secured by gold with effect from today (25). Under the new directions, a maximum LTV ratio of 70% has been imposed on credit facilities secured by gold collateral granted by Licenced Banks and Licenced Finance Companies, including existing credit facilities when renewed on or after the effective date. In addition, the CBSL said the existing maximum LTV ratios applicable to motor vehicle-related credit facilities have been tightened by 10 percentage points. The policy directions have been issued to Licenced Banks, Finance Companies, and Finance Leasing establishments operating in the country. The CBSL said the measures were introduced under its macroprudential mandate to promote prudent lending practices, safeguard the resilience of financial institutions, and prevent the build-up of systemic risks within the financial system. In explaining the decision, the CBSL stated it had observed a significant recent increase in lending linked to gold-backed credit facilities and motor vehicle financing. The Governing Board noted that if such rapid growth trends continue unchecked, they could pose risks to financial sector stability. The CBSL also pointed to heightened uncertainties arising from evolving geopolitical and geoeconomic developments, which have contributed to increased volatility in global asset prices, including gold, as well as fluctuations in exchange rates. According to the CBSL, the recent temporary increase in the surcharge on vehicle imports together with exchange rate movements could artificially inflate vehicle prices in the short term. “Such fluctuations may affect collateral valuations and alter the underlying credit risk profiles, while continued rapid credit expansion warrants an intervention to prevent a potential build-up of excessive risks within the financial system,” the CBSL added. The relevant CBSL directives are available online https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/CBSL_Act_Directions_No_1_of_2026_e.pdf https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/CBSL_Act_Directions_No_2_of_2026_e.pdf
