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May 29, 2020

People seeking bank loans & leasing benefits, disappointed Featured

A large number of persons have been disappointed after attempting to obtain the bank loan and leasing facilities which were repeatedly announced by pro-government media in the recent past.

Speaking at the cabinet briefing on March 25, co-cabinet spokesman Bandula Gunawardena announced a relief package for the public in the backdrop of the Covid-19 outbreak.

Gunawardena said the Cabinet of ministers has approved President Gotabaya Rajapaksa’s proposal to temporary suspend repayment of leasing facilities for three wheelers, school vans, buses, small trucks and etc. for six months with aim of providing them with financial relief until they return back to normal.

Despite the minister stating thus, the majority of persons who have sought leasing facilities to obtain vehicles other than three-wheelers, have been granted concessions only for a period of two months.

Most banks and finance companies have refused to offer the six-month concession facility, telling the majority of them that the Central Bank has advised them to provide the concession only to customers who have obtained a lease less than one million rupees.

However, customers who have obtained such leasing facilities say a million rupee lease is not sufficient to buy a van, bus or car.

They further note that anyone who obtained leasing facilities of below Rs. 1 million will not apply for the six months' moratorium as they will have to pay extra interest for the delayed time.

Meanwhile, it is reported that it is very difficult to get the said to be provided at a 4% interest. This is because banks and financial institutions have been demanding guarantees to provide the loans.

Inadequate funds

The main reason for this problem is the inadequacy of funds allocated to banks and financial institutions to provide relief.

It is said that the Central Bank of Sri Lanka has allocated about 20 billion rupees for such relief measures. When this is split among the banking system, each bank only gets around Rs. 2 - 3 billion.

However, it is reported that the value of consumers' debt relief requests made to a leading commercial bank in the country exceeds over 20 billion.

In the case of a bank such as Bank of Ceylon, this figure could exceed Rs. 100 billion, an industry expert told 'Sri Lanka Mirror'.

In this backdrop, these concessions have already become  impractical.

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