Private credit rises, long-term lending falls

Credit extended to Sri Lanka’s private sector rose to Rs. 2.1 trillion in the first nine months of 2026, from Rs. 1.9 trillion in the corresponding period last year, according to the Central Bank of Sri Lanka.

The figures were presented at a recent meeting of the Committee on Public Finance (COPF), chaired by MP Harsha de Silva, with Central Bank Governor Nandalal Weerasinghe and senior Central Bank officials in attendance.

Central Bank officials told the Committee that licensed commercial banks accounted for around 74% of private sector credit during the period.

However, the Committee raised concerns over a shift in lending patterns, noting that the share of short-term loans had increased from 42% to 47%, while the share of long-term lending had fallen from 35% to 29%.

Committee members questioned whether bank lending was being sufficiently directed towards capital formation, new investment and the expansion of production capacity.

They also sought details on the growth of lending categories, including housing mortgage and vehicle loans.

The discussion also focused on Sri Lanka’s long-term growth prospects, with members stressing the need for reforms in the trade, labour and land sectors to support sustainable economic expansion.

The importance of developing human capital, improving productivity and attracting foreign direct investment was also highlighted.

Meanwhile, Central Bank officials reported an improvement in banking sector stability, with the Stage 3 non-performing loan ratio declining from 9.7% to 8.8%.

They also said capital and liquidity levels in the banking sector remained above the required regulatory thresholds.