Financial News Update: The Central Bank has called on all commercial banks to adhere strictly to the newly reduced interest rates on credit. A press release from the Bank said that by December 27, 2019, each Licensed Commercial Bank (LCB) is required to reduce its weekly Average Weighted Prime Lending Rate (AWPR)1 by at least 250 basis points compared to its AWPR published by the Central Bank of Sri Lanka on April 26, 2019.
“The Monetary Law Act Order No. 02 of 2019 on “Enhancing Efficiency of the Transmission of Recent Policy Decisions to Rupee Denominated Market Lending Rates” required, inter alia, every licensed commercial bank (LCB) to reduce their weekly Average Weighted Prime Lending Rate (AWPR)1 by at least 250 basis points by December 27, 2019, compared to their AWPR published by the Central Bank of Sri Lanka as at April 26, 2019 in the Weekly Economic Indicators publication.
This shall not apply to LCBs, whose AWPR reaches or falls below 9.50 per cent per annum as at the date of this Order or anytime thereafter. The Central Bank observes that several LCBs have complied with the above Order, and in particular, some LCBs have reduced their AWPR sharply during the week ending December 27, 2019 from the previous week ending December 20, 2019 to meet this regulatory requirement.
Accordingly, the overall weekly AWPR has declined by 230 basis points from 12.24 per cent as at April 26, 2019 to 9.94 per cent as at December 27, 2019. This is the first time since April 29, 2016 that AWPR has declined to single digit levels.
