Reply To:
Name - Reply Comment
Last Updated : 2024-03-29 00:02:00
Sri Lanka’s banks have jumped to raise the interest rates on their credit card and several other loan products as the Central Bank last month gave them the green light to price their loans to reflect market interest rates.
Some banks have raised their interest rates as much as by 4.0 percent on products such as credit cards, which were hitherto capped at 24 percent, effectively raising the interest rate to 28 percent per annum.
The Central Bank last month lifted the interest rate caps hitherto placed on credit products such as redit cards, housing loans and a few others, allowing the banks to set their own interest rate caps to reflect the rising market interest rates.
Several banks have already communicated the change in interest to their customers. Certain fees levied on customers by the banks have also seen a staggering rise. The new rates will come into effect from July 1, 2017 onwards.
Some banks have also decided to raise the interest rates charged on temporary overdraft facilities, which were earlier capped at 24 percent.
Early this week, Fitch Ratings predicted higher interest rate pressure to hurt corporate performance during the next 12 months as most of the borrowings are short-term in nature and are on floating rates.
Meanwhile, higher penal rates are also on the cards as previous restrictions on such rates have too been removed.
The caps on penal interest rates were brought in 2013 in a bid to go soft on defaulters when the economy’s credit growth failed to pick up amid multiple attempts as the then authorities were of the belief that such a policy would stimulate demand for credit.
Although the Central Bank also has lifted the 16 percent cap on housing loans, the banks are yet to raise the housing loan rates.
Sri Lanka’s housing loans have been on the rise and account for the highest share under the industry’s construction sectorrelated loans. Higher rates could put pressure on the asset quality of the banks as the fixed income earners would struggle to service their housing loans.
Due to higher interest rates, taxes and inflation adversely affecting the disposable incomes of the people, Sri Lanka’s banks may see an upsurge in sour loans impacting their bottom lines. The growth has slowed down due to challenging operating conditions, which could also have a negative impact on internal capital generation as the ability to make higher profits is now limited.
In recent times, the banks have seen their margins thinning as the cost of funds has escalated because the banks have been fighting for a share of the deposits offering higher rates in an extremely competitive market place.
Sincere Thursday, 22 June 2017 12:44 PM
Good motivation to give up credit cards or at least to minimize its use.
Arnold Thursday, 22 June 2017 12:50 PM
We are stuck in reverse gear. Other countries are going cashless while we are moving towards cash.
CC User Thursday, 22 June 2017 03:19 PM
Use the credit card and pay on time the whole amount on time. Not the Minimum Amount. Then no interest ..
Sanje Thursday, 22 June 2017 03:51 PM
Supoer. Banks just know how to maximize the profits.And Government is just giving in to it.
lkboy Thursday, 22 June 2017 03:57 PM
Sounds no good. If interest rates are going up, the country is going backward.
Ravi Thursday, 22 June 2017 04:02 PM
Already Banks are showing profits in Billions!Come on, crush the consumer and show more on the books next time!
Kingsley Wijesinhe Thursday, 22 June 2017 06:56 PM
How about raising the interest rates paid to depositors as well?
DillonDP Thursday, 22 June 2017 08:32 PM
its not only the CC but also loans in general guess you dont know it
CC Only User Friday, 23 June 2017 10:22 AM
Don' blame it on the credit cards. It's only a problem with your money management. I use only credit cards for all card accepted outlets which amount to 95% of my payments. But I pay the full bill on the payment date and keep a track of all transactions. Rewards program, discounts at supermarkets and other places are all positives of credit cards if you use wisely. I make money with credit cards than using cash. It's easy to analyze your expenses when everything comes in a statement too.
hanas Friday, 23 June 2017 11:44 AM
bank charges are exorbitant and now they will get super profits via DM Android App
madhawa Friday, 23 June 2017 12:14 PM
well done the fashion designer, when the all world encourage electric vehicles, we implement high tax on them, when the all world encourage the plastic cash, we will discourage those !!!!! keep it up !!!!!
Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.
Reply To:
Name - Reply Comment
Though the Government imposed VAT (Value Added Tax) on vegetables and other e
Saving energy has become more of a responsibility than a habit in today’s c
In the coming days, Muslims across the world will welcome the Holy Month of R
As of February 2024, Sri Lanka lost another 38 elephants as a result of the H