Mar 01, 2022

Banks earned in 2021, people-companies debts doubled! Featured

According to the latest data released by the Central Bank of Sri Lanka, the total credit extended by the Sri Lankan banking system to the private sector at the end of last year (2021) was close to Rs. 7 trillion (Rs. 6.981 trillion).

Accordingly, the total amount of loans obtained by the people and companies (private sector) in this country has more than doubled.

According to economists, lower interest rates and the easing of interest rates on loans last year (2021) compared to the previous year (2020) had led to the increase in obtaining loans.

According to the latest data released by the Central Bank of Sri Lanka, private sector borrowings stood at 374 billion rupees at the end of December 2020, up from 811 billion rupees by 2021.

However, in 2019, the country's private sector debt grew by 6.5%. That is 374 billion rupees.

Sri Lanka's total private sector borrowings stood at 4799 trillion rupees at the end of 2017, up to 5561 trillion rupees at the end of 2018, 6170 trillion rupees at the end of 2019 and 6981 trillion rupees at the end of 2021.

Banks prosper but country is collapsing

In this context, economists are of the opinion that the high profits of private banks and financial institutions in the country will not be able to stop in the next few years as in previous years.

They also point out that they are making huge profits from the loans given by those banks.

Some financial institutions have lent money for activities such as auto leasing which ends in 2022-23 at an interest rate of 22% - 18%, which they say is a high profit margin.


In neighboring India, for example, they say that car loans can be obtained at an interest rate of 10%, enabling the public to be debt free and also allowing the banking system to run without incurring debt.

However, they point out that banks in developed countries do not make huge profits, adding that the country will not develop as long as banks and financial institutions continue making excessive profits.

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