Breathing Room for Borrowers: Sri Lanka’s Central Bank Unveils Cyclone Relief Package

Updated: December 05, 2025 12:25

Image Source: Lanka Business News

Sri Lanka’s Central Bank has mandated a temporary suspension of loan repayments for cyclone and flood-affected borrowers, waiving penalties and fees for up to six months to provide urgent financial relief amid ongoing disaster recovery efforts.

The Central Bank of Sri Lanka (CBSL) has announced sweeping relief measures for individuals and businesses hit by the recent cyclonic and flood disasters, instructing all licensed banks to suspend repayments of capital and interest on existing credit facilities for affected borrowers for a period of three to six months. This move is part of a broader effort to cushion the economic impact of Cyclone Ditwah, which caused widespread devastation, loss of life, and disruption across the island nation.

Key Highlights:- The CBSL has directed banks to halt both principal and interest repayments for borrowers whose livelihoods or businesses have been directly affected by the cyclone and floods, offering temporary debt relief for up to six months on a case-by-case basis.

Late payment charges, credit restructuring fees, and penalty interest will also be waived for these borrowers until the end of next month, easing their immediate financial burden.
The central bank’s circular emphasizes that relief measures must be implemented without compromising the overall stability of the financial system, and banks are urged to process relief requests swiftly and transparently.
Affected borrowers can submit their requests in writing or electronically until January 15, 2026, after which banks will assess eligibility and apply the relief as per the guidelines.
In parallel, the Sri Lankan government is setting up a special recovery fund, with public and private sector participation, to support reconstruction and rehabilitation efforts in the hardest-hit regions.

Broader Relief Efforts

The CBSL’s move comes amid mounting international aid, including a $200 million assistance request to the IMF and emergency health funds from the WHO. Local authorities and volunteers are distributing essential supplies, while the government continues to coordinate with global partners for further relief and reconstruction.

Sources: Reuters, Central Bank of Sri Lanka, Hindustan Times

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