The Hon. (Dr.) Anil Jayantha - Minister of Labour and Deputy Minister of Economic Development

¶ 01 Reviewal of policies in the leasing sector: Statement.

¶ 02 Hon. Speaker, this relates to a Question raised on 06.08.2025 by the Hon. Ravi Karunanayake to the Ministry of Finance. On behalf of the Minister of Finance, Procurement and Economic Development, I provide answers:

¶ 03 1. The Central Bank of Sri Lanka (CBSL) has not issued specific/separate directions to protect all borrowers who involuntarily default in the leasing sector. The existing Financial Consumer Protection Framework and Regulations apply appropriately to all borrowers.

¶ 04 2. Directions on Customer Charter of Licensed Banks (2011) and on the Financial Customer Protection Framework for Finance Companies and Specialized Leasing Companies (2018) safeguard customer interests, maintain healthy relationships and strengthen confidence.

¶ 05 3. Financial Consumer Protection Regulation of 09.08.2023 requires financial service providers and their agents not to engage in unfair practices harming consumers; not to act in bad faith or negligently. “Unfair practices” include deceptive/abusive/misleading conduct, aggressive debt collection, raising credit limits without prior consent and imposing excessive, disproportionate fees, penalties or future interest.

¶ 06 4. Recovery actions are governed mainly by terms and conditions in finance leasing/loan agreements between licensed banks, finance companies or specialized leasing companies and borrowers.

¶ 07 5. While CBSL has not issued specific directions on repossession of vehicles/equipment, the Finance Leasing Act, No. 56 of 2000 specifies repossession procedures. LBs, FCs and SLCs generally negotiate with customers before repossession and treat repossession as a last resort.

¶ 08 6. Directions align with international best practices and ensure adequate risk management. Demarcating willful vs involuntary defaulters is difficult at regulatory level; institutions are advised to negotiate in good faith case-by-case.

¶ 09 7. The approach is to review borrower hardships from events beyond control and provide relief. During the Easter attacks, COVID-19 and the subsequent economic crisis, moratoria with concessions were introduced; Business Revival and Post-COVID Revival Units were established to facilitate sustainable revival.

¶ 10 8. Borrowers can seek redress via Mediation Boards or the Financial Ombudsman. Complaints can be lodged with CBSL’s Financial Consumer Relations Department; CBSL may call for information, hearings or spot examinations and require specific actions. Borrowers may also pursue legal action under contract/consumer law.

¶ 11 9. If systemic issues are observed, CBSL may consider further policy refinements balancing interests of borrowers and depositors.

¶ 12 10. For supervisory purposes, CBSL collects information from licensed banks, finance companies and specialized leasing companies. Granular breakdown of leasing contracts is not available. Large institutions have higher market shares due to branch networks and resources, not necessarily regulatory asymmetry.

¶ 13 Thank you.