The Central Bank of Sri Lanka has introduced stricter vehicle financing regulations by further reducing the maximum loan-to-value (LTV) ratios applicable to vehicle purchases through banks and finance companies.
The new rules, issued under Regulation No. 01 of 2026 by Nandalal Weerasinghe, came into effect today (May 25, 2026).
Key Changes Under the New Regulations
Commercial Vehicles
The maximum financing limit for commercial vehicles has been reduced:
- From 70%
- To 60%
The previous 70% cap had been introduced in November 2025.
Cars, SUVs, Vans and Three-Wheelers
The financing limit for:
- Cars
- SUVs
- Vans
- Three-wheelers
- Other private vehicles
has now been reduced:
- From 50%
- To 40%
Applicability
According to the Central Bank, the new rules apply to:
- Unregistered vehicles
- Vehicles used for less than one year since first registration
In addition:
- Registered vehicles that have been used in Sri Lanka for more than one year will also be subject to a maximum financing limit of 60%
Transitional Arrangements
The CBSL stated that previous financing limits will still apply to vehicles imported under Letters of Credit (LCs) opened between:
- November 8, 2025
- May 25, 2026
Purpose of the Measures
The regulations were issued under Section 105(1) of the Central Bank of Sri Lanka Act No. 16 of 2023 as part of broader macroprudential measures targeting:
- Licensed banks
- Finance companies
- Registered leasing institutions
The move comes amid government and Central Bank efforts to:
- Reduce pressure on the Sri Lankan Rupee
- Limit excessive vehicle imports
- Protect foreign exchange reserves
- Maintain financial stability amid rising import and fuel costs
