The Central Bank of Sri Lanka (CBSL) has announced a fresh tightening of vehicle financing regulations, further reducing the maximum loan-to-value (LTV) ratios that banks and finance companies can offer for vehicle purchases.

The new regulations, issued under Directions No. 01 of 2026 by CBSL Governor Dr. Nandalal Weerasinghe, will come into effect from 25 May 2026.

Under the latest directions, the maximum LTV ratio for commercial vehicles has been reduced to 60%, down from the 70% cap introduced in November 2025.

Meanwhile, financing for motor cars, SUVs, vans, three-wheelers, and other vehicles has now been capped at 40%, compared to the previous 50% limit imposed under Directions No. 03 of 2025.

CBSL said the latest directions apply to unregistered vehicles and vehicles registered for less than one year after first registration. Registered vehicles used in Sri Lanka for more than one year after first registration will also be subject to a maximum 60% financing cap.

However, the latest directions also include transitional provisions for vehicle imports already in progress.

According to the CBSL, vehicles imported under Letters of Credit (LCs) opened between 08 November 2025 and 25 May 2026 will continue to qualify under the previous financing limits.

The Central Bank said the measures were issued under Section 105(1) of the Central Bank of Sri Lanka Act, No. 16 of 2023, as part of macroprudential regulations aimed at licensed banks, finance companies, and registered finance leasing establishments. (Newswire)

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