People lean heavily on personal loans for survival: Study

Colombo, June 9 (Daily Mirror) - Sri Lankans have increasingly turned to personal and consumption-related borrowing over the past two years, with personal loans recording a sharp 35 per cent increase between December 2024 and March 2026, the latest data show.

According to a research conducted under the leadership of Professor Wasantha Athukorala, an Economics Professor at the University of Peradeniya, outstanding personal loans rose from Rs. 1,815 billion in December 2024 to Rs. 2,450 billion by March 2026, reflecting an increase of Rs. 635 billion.

The rise suggests growing reliance on credit by households to meet day-to-day expenses and finance personal needs amid economic pressures, according to him.

On the other hand, a particularly notable increase was recorded in loans for consumer durables, which surged by 213 per cent during the period.

Consumer durable loans—used to purchase long-lasting household items such as vehicles, refrigerators, televisions, washing machines, furniture and electronic appliances—increased from Rs. 40 billion in December 2024 to Rs. 123 billion by March 2026, an increase of Rs. 83 billion.

Furthermore, pawning advances also recorded a significant rise, climbing from Rs. 660 billion to Rs. 1,012 billion during the period, highlighting continued dependence on gold-backed borrowing by households and small businesses.

Meanwhile, spending through credit cards also increased, with the total amount spent rising from Rs. 168 billion in December 2024 to Rs. 197 billion by March 2026.

In contrast, personal educational loans registered a sharp decline during the period, falling by nearly 60 per cent, indicating reduced borrowing for education-related purposes.

Personal health loans, however, recorded only a marginal increase, suggesting relatively stable demand for healthcare-related financing.

The category classified as "other personal loans" also expanded considerably, rising from Rs. 880 billion to Rs. 1,020 billion over the period.

Commenting on the scenario, Professor Athukorala said the figures point to a growing appetite for consumption-driven borrowing, particularly for household purchases and personal expenditure.

“The data indicate that people are increasingly borrowing for household consumption and personal expenditure. This trend also encourages the import of goods such as vehicles, leading to an outflow of foreign exchange from the country,” he said.

He warned that the continued expansion of consumption-led credit could place additional pressure on Sri Lanka’s external sector if not accompanied by growth in productive economic activity.