Sri Lanka slaps 100-pct margin on car LCs: Finance Minister

Oct 02, 2015 (LBO) – Sri Lanka will impose a 100 percent margin deposit on car import LCs with effect from today, Finance Minister Ravi Karunanayake told at a media briefing held in Colombo.

According to data Sri Lanka’s expenses on vehicle imports has doubled to 744 million US dollars for year 2015 compared to 374 million dollars in the same period last year.

The margin will be effective from today October 02, 2015 Karunanayake said.

The same step was last taken in 2013.

Sri Lanka has imported about 491,000 vehicles for the eight months ended August this year.

“We have more vehicles in Sri Lanka than we require at the moment. Even though we understand the need to have a vehicle,” Karunanayake said.

“We are taking these measures to control it,”

The loan to value ratio (LTV) for vehicles, however, will be increased back from 70 percent to 90 percent due to the imposition of the 100 percent margin deposit on LCs.

“When we increase the LC margin, we can relax the loan value,” Karunanayake said.

“We received a lot of requests from banks and finance companies to relax the loan value as it was hitting the second hand car market.”