Credit Track

May 24, 2010 (LBO) – Loans to private borrowers from Sri Lanka’s commercial banks grew 23 billion rupees in March, the biggest monthly gain since credit started to grow last September, official data shows. Central bank credit to government, which surged 30 billion in February, fell back to 100 billion rupees in March.

Sri Lanka’s central bank has kept inflation low by historical standards from mid 2009, though prices are still growing faster than regional or global averages.

Even now it is keeping its policy rates at 9.75 percent, one of the highest in the world, but has been injecting money to the economy at lower rates further along the yield curve to monetize state debt. Total loans to the private sector grew to 1,235.1 billion rupees in March from 1,212.1 billion rupees in February 2010, the Central Bank said.

The majority of the loans or 20.3 billion rupees were rupee loans from the domestic banking units of commercial banks.

Total forex loans outstanding grew 2.6 billion in March to 150.8 billion rupees.

But loans from domestic banking unit to the state rose to 451.6 billion rupees from 428.5 billion rupees.