September private credit hits Rs.236bn; highest on record

The licensed commercial banks extended a mammoth Rs.236.3 billion in new credit to the private sector in September 2025, marking a substantial 22.1 percent growth from a year earlier. 

The figure reflects the credit demand reaching record highs amid the rock-bottom interest rates and a rapidly expanding economy.

With the amount of credit disbursed for the month, September became the strongest month on record for private sector lending, surpassing the previous high set in August, when the banks expanded their private sector credit by Rs.226.8 billion.

The September figure brought total private sector credit for the first nine months of the year to an all-time high of Rs.1,364.3 billion.

The private sector credit growth was broad-based across industry, services, agriculture and personal loans. However, the Committee on Public Finance recently questioned the Central Bank about the extent of lending for vehicle imports, suggesting possible overexposure in that segment.

While it is unclear whether the public hearing prompted immediate action, the Central Bank on Friday reduced the loan-to-value ratios, effective November 8, to 50 percent for private vehicles and 70 percent for commercial vehicles, from 60 percent and 80 percent, respectively.

The measure is expected to slow vehicle-related lending, though this may be offset by credit growth elsewhere in the economy, including personal and small business loans.

With the government targeting a medium-term economic growth of over 7 percent, the current pace of credit expansion is expected to continue.

However, a slight uptick in interest rates is anticipated towards the middle to latter half of next year, though it is unlikely to derail the credit momentum.

President Anura Kumara Dissanayake, in his capacity as the Finance Minister, last Friday announced a series of measures and concessionary loan schemes for small businesses, which are expected to further support the banks’ loan book expansion.

The banks have also reported strong performances for the September quarter, according to the interim financial results released so far.