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Banks affirm strong support for SMEs while reiterating the need to protect customer deposits

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Tuesday, 1st July 2025: The Sri Lanka Banks’ Association (SLBA), representing all licenced commercial banks in the country, today issued a statement firmly rejecting attempts by a small group of borrowers to create alarm and confusion over the potential use of parate laws, and assuring the business community and the public that banks have no intention of launching widespread parate proceedings now that the grace period has ended.

Following the suspension of parate laws by the Government up to 31st March 2025, the banking sector voluntarily extended the moratorium for a further three months, enabling borrowers in difficulty to engage with banks and restructure their loans. As a result, many borrowers obtained further relief on repayments, in some instances extending the grace period up to December 2025.

With this period now concluded, a handful of borrowers has resumed agitation, seeking to whip up panic about a purported imminent flood of parate actions and auctions of mortgaged assets. The SLBA categorically states that these claims are not only exaggerated but are dangerously counterproductive at a time when the majority of borrowers are working constructively with banks to revive their businesses.

“We wish to reassure existing and potential borrowers that there is no intention by banks to rush into parate action,” the SLBA said. “The reality is that only a very small fraction of borrowers default to the extent that they become eligible for parate execution. Of that fraction, the overwhelming majority are still assisted by their banks to reschedule loans and avoid asset sales.”

To illustrate this point, the SLBA pointed out that in the five years prior to the suspension of parate laws – between 2019 and 2023, which were among the most challenging years for debt servicing in Sri Lanka – less than 1% of non-performing loans were ultimately subjected to parate action. This data underlines that parate execution is used strictly as a last resort when all attempts at resolution have failed.

“The attempts by some parties to portray parate laws as an aggressive first response by banks are both misleading and unhelpful,” the SLBA said. “In truth, parate laws exist to protect depositors’ funds, which are lent in good faith to support individuals, SMEs, and larger enterprises alike. Banks prefer to retain their customers and recover loans through cooperation rather than enforcement.”

The Association further noted that the banking sector has shown significant patience and flexibility, supporting thousands of businesses affected by the Easter Sunday attacks, the COVID-19 pandemic, and the economic crisis. Even now, all banks maintain dedicated Business Revival Units to help distressed borrowers restructure loans and re-establish viable operations, and are even working with borrowers who are outside the parameters established to support customers impacted by adverse economic events since 2020, the Association said.

“It is deeply regrettable that instead of engaging with these mechanisms, a small number of borrowers are seeking to incite fear and erode public confidence in the financial system,” the SLBA said. “Such actions risk undermining both the stability of the banking sector and the prospects of genuine borrowers who are committed to meeting their obligations.”

The SLBA concluded: “We urge all borrowers facing difficulties to approach their banks without delay, to explore solutions in a transparent and proactive manner. The strength and stability of the banking system – on which depositors, investors and the wider economy rely – depend on responsible behaviour and constructive engagement, not misplaced panic.”



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Heat index likely to increase up to ‘Caution level’ at some places in the Northern, North-central, North-western, Western, Sabaragamuwa, Southern and Eastern provinces and Monaragala district

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Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre at 3.30 p.m. on 11 April 2026, valid for 12 April 2026

The Heat index, the temperature felt on the human body is likely to increase up to ‘Caution level’ at some places in the Northern, North-central, North-western, Western, Sabaragamuwa, Southern and Eastern provinces and Monaragala district.

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.

Effect of the heat index on human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED

Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.

Note:  In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.

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Sun directly overhead Cheddikulam, Kebithigollewa, Gomarankadawala and Nilaveli about 12:11 noon. today [12]

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On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka from 05th to 15th of April in this year.

The nearest areas of Sri Lanka over which the sun is overhead today (12th) are Cheddikulam, Kebithigollewa, Gomarankadawala and Nilaveli about 12:11 noon.

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CEB orders temporary shutdown of large rooftop solar systems

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The Ceylon Electricity Board (CEB) has directed owners of large-scale rooftop solar systems to temporarily disconnect their installations for a 10-day period beginning from Friday (April 10), citing growing concerns over grid stability amid low electricity demand and high solar generation.

The directive applies to rooftop solar systems exceeding 300 kW capacity, which are required to remain switched off until April 20. The move coincides with the extended holiday season, during which national electricity demand typically declines, alongside prevailing sunny weather conditions that significantly increase solar output.

Senior electrical engineers told The Island that the decision, though exceptional, was necessitated by operational risks posed to the national grid.

“We are seeing a pronounced imbalance between supply and demand,” a senior CEB system control engineer said. “With industries and commercial establishments operating at reduced levels during the holidays, demand drops. At the same time, solar generation remains high, creating excess power that the grid struggles to absorb.”

He explained that such imbalances could lead to fluctuations in system frequency, potentially threatening the stability of the grid. “If generation exceeds demand, frequency rises beyond acceptable limits.

This can trigger automatic protection mechanisms or, in extreme cases, lead to partial outages.”Another senior engineer attached to the transmission division noted that managing distributed solar generation remains a technical challenge.

“Unlike conventional power plants, rooftop solar systems are not centrally dispatchable. We cannot directly control their output in real time. This limits our ability to balance the system during periods of excess generation,” he said.

He added that the country’s grid infrastructure is still adapting to the rapid growth of renewable energy. “We lack sufficient large-scale battery storage and advanced grid management systems to effectively handle these fluctuations. Until such capabilities are enhanced, temporary curtailment becomes necessary.”

Engineers also pointed out that conventional thermal plants cannot be abruptly shut down or adjusted to compensate for sudden surges in solar generation.

“These plants require minimum stable operating levels. When solar floods the grid during low demand, it creates operational constraints that are not easy to manage,” one official said.

The CEB, in its statement, expressed appreciation for the cooperation of solar system owners affected by the measure, stressing that it is a short-term intervention aimed at ensuring uninterrupted and stable electricity supply across the country.

Energy experts say the development underscores the urgent need for grid modernization, including investment in battery energy storage systems, smart grid technologies, and improved demand-side management.

“This is part of the transition challenge,” an independent analyst noted. “As solar penetration increases, the grid must evolve to become more flexible. Otherwise, curtailment will remain a recurring necessity.”

Despite the temporary shutdown, CEB engineers reaffirmed their commitment to expanding renewable energy.

“Solar power is a key pillar of Sri Lanka’s future energy mix,” a senior engineer said. “But integration must be carefully managed. Grid stability cannot be compromised.”

The temporary disconnection order, which took effect yesterday, marks a critical moment in Sri Lanka’s energy transition—highlighting both the progress made in renewable energy adoption and the technical hurdles that remain.

By Ifham Nizam

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