Tighter Limits on Gold-Backed and Vehicle Loans to Reduce Risk: Fitch Ratings

31-May-2026

.

Fitch Ratings has stated that stricter lending limits on gold-backed loans and motor vehicle financing in Sri Lanka are expected to reduce risk exposure among lenders, particularly finance companies.

The Central Bank of Sri Lanka has capped the loan-to-value ratio for gold-backed loans issued by licensed banks and finance companies at 70 per cent. In addition, lending limits for motor vehicle loans have been tightened by 10 percentage points.

According to Fitch, these measures target two rapidly growing lending segments that account for a significant share of finance company portfolios.

While the restrictions may affect loan growth and revenue generation among institutions heavily exposed to these sectors, they are expected to strengthen risk management and reduce potential vulnerabilities, particularly in gold-backed lending.