Central Bank Governor Nivard Cabraal has also urged banks to lend, but to well managed projects which banks are happy to lend to.
Credit to government fell 2.1 percent in August 2010 to 697.4 billion rupees from 712.3 billion rupees a year earlier. Central Bank credit to government was also down 6.5 percent in August to 113 billion rupees.
However central bank credit to government (printed money) spiked up mid-year raising concerns.
Meanwhile loans to state businesses were up steeply by 194 percent to 106.4 billion rupees. In Sri Lanka state businesses run large losses and indirectly bear budgetary losses.Sri Lanka's petroleum firms for example are taxed till they run losses and prices are politically controlled.