The Central Bank of Sri Lanka (CBSL) has ordered licensed finance companies to immediately halt regulatory bypass practices and enforce strict vehicle financing limits to prevent systemic financial instability.
The directive, issued on 28 July 2026 by the Macroprudential Surveillance Department of the central bank to chief executive officers of all registered finance firms across the island, follows regulatory discoveries of artificially inflated vehicle valuations and improper bridging loans used to circumvent existing credit controls.
Regulators discovered that motor vehicle valuers and sellers were routinely submitting valuations and invoices significantly higher than prevailing market prices, artificially inflating asset values across the non-bank financial sector.
The central monetary authority explicitly targeted alternative and secondary financing structures, confirming that bridging facilities provided alongside primary leases, hire purchase agreements, and standard motor vehicle loans fall strictly under regulatory caps.
Officials instructed financial institutions to cease disbursing or facilitating any credit arrangements that directly or indirectly breach prescribed loan-to-value boundaries.
The regulator warned that institutions prioritizing short-term profitability over macroprudential guidelines risk compounding systemic vulnerabilities, stressing that compliance must be maintained in both form and substance to safeguard long-term economic resilience.