News
CBSL says interest waiver on loans and leases could undermine stability of fiscal system
‘Moratorium related to payment of installments on capital borrowed ‘
by Suresh Perera
Notwithstanding protests over charging interest on repayment of loans and leases based on the one-year Covid-19 related moratorium, a senior Central Bank of Sri Lanka (CBSL) official said there’s no question of reversing the decision as neither banks nor other financial institutions can afford to absorb the negative impact of a waiver on interest on the capital, particularly at a time of an economic crunch.
“With the country facing a financial crisis largely due to the fallout of the pandemic, the government cannot be expected to offer further relief by reducing the interest component on the due repayments”, he stressed.
In terms of a Central Bank directive, all banks have been authorized to levy seven percent interest per annum on the total outstanding of loans and leases up to March 31, 2021, while finance companies can charge 11.5 percent.
Under the moratorium, credit facilities and leasing arrangements secured by key economic sectors hit by the outbreak of coronavirus were initially given a six-month grace period on repayments with effect from April 1, 2020. It was later extended by another six months as the worsening pandemic situation continued to cripple economic activity.
“The grace period related to payment of installments on the capital borrowed to fund loan and leasing facilities. Where the interest payments were concerned, a rate was agreed upon after a discussion with the stakeholders”, the official noted.
How can financial institutions, particularly finance companies, run their day-to-day operations and honor their commitments towards investors if there’s no return on borrowings?, he queried.
This can be done only if there is a situation where they don’t have to pay interest on investor holdings, he pointed out. “If they were to offer a return to one segment, while being denied their due revenue from the other, mounting losses are bound to push them towards insolvency”.
Financial institutions have to also absorb the cost of funds, as for example, a customer who has to repay a loan installment of Rs.10 million per month, holds back a repayment of Rs. 120 million during the one-year moratorium, the official explained.
With 50% of their funds disbursed as loans, the cash flow of these institutions have taken a big hit”, he said.
Under the circumstances, it is reasonable that at least the due interest on the borrowings are settled on time to ensure the survival of the financial sector in these difficult times, he said.
The tourism industry is still tottering. In this scenario, their loan installments are unlikely to roll in even after the grace period ends on March 31, 2021, he remarked.
He said that in the event of a natural disaster, the government can be expected to disburse funds to provide relief. However, a bail out on the interest payable by borrowers is too much to demand at a time of an economic downturn.
“We have received a plethora of complaints on this matter, and certainly understand that there are difficulties, but a perfect solution to please everybody is difficult to find”.
“Levying 11.5 percent interest on the total capital outstanding is unacceptable”, protested D. Nalaka Lankapurage, secretary of the All Ceylon Vehicle Leasing and Installment Payers Collective (ACVLIPC).
“We don’t mind paying reasonable interest on the monthly premium, but when it comes to the total capital outstanding, the commitment is too much to bear as business is slack across the board”, he complained.
With interest calculated on the basis of the total capital outstanding, even small-time borrowers are asked to pay Rs. 50,000 to Rs. 60,000 per month, which is next to impossible with business at a low ebb, he noted.
“Financial institutions even decline to give us a breakdown of the payments. When they demand, we are expected to duly pocket out with no questions asked”, Lankapurage asserted.
Many of these institutions have made billions of rupees in profits over the years. Can’t they offer us a degree of relief even at a time the pandemic has ripped apart life and livelihoods in the country?, he asked.
“We admit that financial establishments cannot give loans gratis. All what we are asking for is a reasonable rate of interest on the monthly premium; not on the total capital outstanding”, he continued.
Lankapurage said that those who have leased vehicles have to also shoulder the added burden of paying insurance and meeting running costs.
Members of the ACVLIPC staged a protest opposite the Presidential Secretariat recently against what they termed a “rip-off by banks and other financial institutions”.
A memorandum addressed to the President, which set out their grievances, was handed over to a Presidential Secretariat official during the agitation.
News
Senior citizens above 70 years to receive March allowances on Thursday (26)
The Welfare Benefits Board has announced that the March allowance for senior citizens over 70 years of age will be credited to each beneficiaries account on Thursday (26th).
693,801 senior citizens over the age of 70 years are set to benifit under this welfare scheme
News
CEB Engineers warn public to be prepared for power cuts after New Year
A looming power crisis is casting an ominous shadow over the country, with engineers warning that the current “no power cut” situation may not last beyond the Sinhala and Tamil New Year due to worsening diesel shortages and ongoing coal-related disruptions.
A senior electrical engineer, attached to the Ceylon Electricity Board Engineers Union, cautioned that while authorities appear to be managing the system for now, the underlying fuel constraints are reaching a critical point.
He told The Island: “At the moment, there are no scheduled power cuts across the country. But this is being maintained under significant strain. With the diesel shortage and unresolved coal issues, sustaining uninterrupted supply, beyond the New Year period, will be extremely challenging.”
The engineer noted that thermal power generation — particularly diesel-based plants — has become increasingly difficult to sustain due to limited fuel stocks and logistical bottlenecks. At the same time, the substandard quality coal supply issues that have plagued recent shipments continue to undermine the efficiency of base-load generation.
“We are stretching available resources to avoid immediate outages. owever, unless there is a rapid improvement in fuel availability, the system will be forced into load shedding soon after the New Year,” he warned.
According to him, authorities are likely to delay any scheduled outages until after the festive season to avoid public backlash and economic disruption during a traditionally sensitive period.
“Most probably, they will try to continue like this until the New Year. But after that, daytime or peak-time load shedding becomes almost inevitable if the situation remains unchanged,” he added.
Energy analysts say the warning reflects a deeper structural vulnerability within the power sector, where over-reliance on imported fossil fuels — particularly diesel and coal — continues to expose the system to external shocks and procurement failures.
The recent use of substandard coal has already resulted in reduced generation capacity at the country’s sole coal power plant at Norochcholai, compounding the pressure on thermal plants to bridge the shortfall. Engineers say this has forced operators to depend more heavily on costly diesel generation — an option now constrained by supply shortages.
Industry sources indicate that demand is also on the rise, particularly during night peak hours, possibly driven by increased reliance on electricity for cooking, amid gas shortages, further tightening the supply-demand balance.
Despite the absence of official announcements, insiders suggest contingency planning for load shedding is already underway.
“If the fuel situation does not improve within the next few weeks, controlled power cuts will be the only viable option to protect the grid from a total system failure,” the engineer stressed.
The warning comes at a time when the country is attempting to maintain economic stability following successive crises, with uninterrupted power supply considered critical for industry, commerce, and daily life.
However, unless urgent corrective measures are taken to secure reliable fuel supplies and stabilise generation capacity, the return of power cuts — including during daytime hours — appears increasingly unavoidable, an expert said.
By Ifham Nizam
News
Japanese boost to Sri J’pura Hospital, an outright gift from Tokyo during JRJ rule
Japanese Ambassador to Colombo, Akio Isomata, on 24 March, handed over the newly established dental unit and 4D Angio CT suite at Sri Jayewardenepura General Hospital. Health Minister Dr. Nalinda Jayatissa and other senior officials from the Ministry of Health and the hospital attended the event.
Highlighting the strong partnership between Japan and Sri Lanka in the health sector, the Embassy issued the following press release yesterday: “This handover marks the second phase of the project, following the initial provision of ophthalmic equipment in December 2023. The current phase represents a significant milestone, featuring the introduction of a state-of-the-art CT Angiography system – the first of its kind in South Asia – as well as dental units. These contributions are expected to enhance Sri Lanka’s capacity to address non-communicable diseases (NCDs), including cancer, stroke, and diabetes, thereby saving lives, reducing long-term complications, and improving the quality of life of patients.
The CT Angiography system integrates CT scanning and angiography functions, enabling highly accurate and timely diagnosis and treatment. It is expected to further strengthen the hospital’s role as a key medical hub in Sri Lanka and the wider region.
In addition, the provision of 10 dental units will support the establishment and enhancement of dental services at the hospital. In Japan, oral health is considered closely linked to overall health and plays an important role in extending healthy life expectancy. This support is, therefore, also expected to contribute to the promotion of preventive healthcare in Sri Lanka.
The Sri Jayewardenepura General Hospital was constructed in 1984 with grant assistance from the Government of Japan. The well-known “1001-bed” story—originating from former President J.R. Jayewardene’s remark to add one more bed to the originally planned 1,000—remains a memorable episode reflecting the history of this cooperation.
Japan has consistently supported Sri Lanka’s health sector over the decades, including the development of medical facilities, strengthening of blood supply systems, and support during the COVID-19 pandemic through vaccine delivery assistance. Furthermore, during Sri Lanka’s recent economic crisis, Japan provided fuel essential for maintaining healthcare services, and in times of natural disasters, dispatched emergency medical teams to deliver urgent care. These efforts demonstrate Japan’s continued commitment to standing by Sri Lanka, especially in times of need. These efforts reflect Japan’s commitment to “investment in people” and “human security,” supporting a healthcare system in which all individuals can live healthy and dignified lives.

Japanese Ambassador Isomata with Minister Dr Jayatissa and officials (pic courtesy Japanese Embassy)
Ambassador Isomata remarked, “This support is not merely for the provision of equipment, but also for the consolidation of the foundation for safeguarding lives and livelihoods. Sri Jayewardenepura General Hospital, built with the support of Japan, stands as a symbol of the longstanding friendship between our two countries. We sincerely hope that this project will contribute to building a sustainable healthcare system that benefits future generations in the field of medicine and further strengthen our partnership.”
Minister Jayatissa highlighted,” This is not just a donation of machines. It is an investment in the lives and futures of our patients. By establishing this modern dental unit, we are addressing a critical need in the prevention and treatment of oral diseases for our population. I wish to express our deepest gratitude to the Government and people of Japan for this generous assistance. These are acts of true friendship, and the people of Sri Lanka will always remember them with gratitude.”
Japan will continue to work closely with Sri Lanka to further strengthen the healthcare sector and deepen the longstanding friendship between the two countries.”
-
Features3 days agoTrincomalee oil tank farm: An engineering marvel
-
News7 days agoBailey Bridge inaugurated at Chilaw
-
News6 days agoCIABOC tells court Kapila gave Rs 60 mn to MR and Rs. 20 mn to Priyankara
-
News7 days agoPay hike demand: CEB workers climb down from 40 % to 15–20%
-
Features6 days agoScience and diplomacy in a changing world
-
Features3 days agoThe scientist who was finally heard
-
News5 days agoColombo, Oslo steps up efforts to strengthen bilateral cooperation in key environmental priority areas
-
News3 days agoSubstandard coal deepens energy crisis, warns former CEB Chief
