90% LTV from today; Ravi K instructs CB

19 October 2015 02:51 am

Assures of unchanged taxes on vehicles from the budget 

In an interesting turn of events, Finance Minister Ravi Karunanayake has sent formal instructions to the Central Bank asking the monetary authority to revise the vehicle financing Loan-To-Value (LTV) up to 90 percent from the current 70 percent with effect from today. 
Karunanayake yesterday told Mirror Business that the 90 percent LTV would be effective from today but the banking and financial sector is yet to receive the formal directive from the Central Bank. 
The October monetary policy review is due tomorrow (October 20) and it is expected that the change to be announced with the policy review. 
Last week, Karunanayake came under flack for misleading the public for his statement on increasing the LTV up to 90 percent as the Central Bank denied of receiving formal instructions to effect the change. 
The new development is coming into effect after Karunanayake met the vehicle importers last Friday (October 16) at the ministry premises where he had given his assurance to that effect and had also promised to rectify a host of other hardships faced by the vehicle importers.
“He confided us that the vehicle LTV would definitely be brought up to 90 percent level as he asserted earlier and the necessary instructions to that effect to be sent to the Central Bank within a couple of days,” said the President of the Vehicle Importers Association of Lanka (VIAL), Indika Sampath Merenchige. 
Last week, the Central Bank Deputy Governor, Ananda Silva said a final decision on the LTV could only be taken by the monetary board and hence the earlier directive issued on September 14 imposing a 70 percent LTV still prevails. Apart from the increasing of the LTV, the Finance Minister will also send instructions to the Central Bank on the need to have the 100 percent Letter of Credit (LC) margin to curtail the vehicle imports. 
“It was also informed (by the minister) that there would be no changes in taxes or in other matters relating to vehicle imports before the budget or from the budget to be presented (on November 22),” Merenchige said in a statement sent to his members after the meeting. 
The minister has also assured that no changes in the tax structure impacting the vehicles would be brought in until the budget to be presented next year (for the fiscal year 2017).