The Central Bank of Sri Lanka (CBSL) has directed all licensed banks to offer urgent financial relief to individuals and businesses affected by recent cyclonic and flood disasters across the country. Issued through Circular No. 04 of 2025 on December 5, 2025, the directive enables borrowers whose income or livelihoods have been directly impacted to apply for relief on or before January 15, 2026.
Under the new measures, banks are required to suspend repayment of capital and interest on existing loans for a period of 3 to 6 months. During this moratorium period, financial institutions are prohibited from charging interest rates higher than the existing contractual rate and from levying interest on deferred interest payments, preventing additional costs for borrowers.
The CBSL has also instructed banks to extend fresh credit facilities to affected individuals and enterprises, with repayment beginning at least three months after the end of the moratorium. New loans granted for tenures up to two years will carry a maximum interest rate of 9% per annum or the borrower’s existing contract rate, whichever is lower, while longer-term loans may later be adjusted to a rate linked to the Average Weighted Prime Lending Rate (AWPR).
In addition, banks must suspend charges for cheque returns, stop payments, late payment fees, restructuring fees and penal interest until January 31, 2026. Any automatically charged fees must be refunded within three business days. Borrowers must receive clear breakdowns of capital, interest, and other costs in any restructuring agreement, and banks are banned from rejecting new loan applications solely due to negative CRIB histories caused by disaster-related financial stress.
The CBSL noted that these measures are being implemented in coordination with government-led disaster support initiatives, aimed at restoring livelihoods and reviving business activity following one of the country’s most damaging climate-related catastrophes.
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