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Sat, 25 October 2014 13:11:19
Sri Lanka brokers hail bank credit move
21 Dec, 2011 06:54:37
Dec 21, 2011 (LBO) - Sri Lanka's stock brokers welcome a decision by the Central Bank to lift a 5.0 percent ceiling imposed on margin loans for capital market activities following a meeting with President Mahinda Rajapaksa.
"Central Bank issued a directive to all the Commercial Banks that the 5 percent ceiling on lending against listed securities has been removed altogether with immediate effect," the Colombo Stock Brokers Association said in a statement.

"Banks can now use their discretion to decide on the amount to be lent to margin trading seeking customers. This timely gesture can inject billions of Rupees by way of margin trading funds to the stock market.

The CSBA said it was thanking President Rajapaksa, economic development minister Basil Rajapaksa, Central Bank Governor Nivard Cabraal and deputy governor Ananda Silva for the move.

Colombo stocks have been correcting downwards after rising steeply for more than two years partly due to a credit fired bubble, which prompted mal-investments according to some analysts.

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READER COMMENT(S)
2. Malaka Dec 21
Credit handling responsibility should be limited to the banks who know how to handle the risks. That's why they haven't used even the given 5%. I hope SEC will not bend to brokers and put the Sri Lankan economy in danger by giving the monkeys (brokers) the blade (credit).
1. CT Fan Dec 21
This broker has forgotten to say that only 2 of the banks had hit the 5% limit! the bigger ones like COMB had plenty of room to spare.

They just chose not to allocate any more funds for margin trading because unlike this broker, they know the risks involved.