• Government aims to restructure debt and support businesses
• IMF recommends lifting the suspension to manage NPLs

Sri Lanka will extend the suspension of parate right execution by the banking sector till June 2025, as the government has started to analyse loans given by the banks, Economic Development Deputy Minister Prof. Anil Jayantha Fernando said.

Speaking to TV Derana on Monday (25), Fernando said that the government will extend the parate right execution suspension by another six months after reaching an agreement with the banking sector.

He said that the government discussed with the bankers at which they agreed that they wanted to build up the debtors’ businesses in some way rather than seizing their assets and putting businesses down under.

“We are analysing those debts, categorised by the value of loans and the value of securities kept at the bank,” he said.

Fernando said that during the analysis it was found that there are some loans which are categorised as business loans still, there are no businesses associated while there are also wilful defaulters.

“Until the final result of that analysis comes, we will have to extend the suspension (of parate execution) by another 6 months,” he added.

In June this year, the former government, after taking into consideration the pleas made by affected borrowers especially the small and medium enterprises sector, placed and passed an amendment to temporarily halt the parate action up to 15 December.

However, at the end of the second review, the International Monetary Fund (IMF) said that the suspension of banks’ repossession of collateral (Parate executions) will hinder the banks’ ability to manage non-performing loans (NPL) and price credit risks and should be lifted as soon as possible.

It also encouraged a negotiated NPL solution to avoid excessive liquidation.