The Cabinet of Ministers has approved the extension of the moratorium on the execution of the ‘Parate’ Law, which prevents banks from seizing and auctioning creditors’ properties, until 31 March 2025.
Cabinet Spokesman Nalinda Jayatissa, announcing this week’s decisions earlier today (10), explained that Sri Lanka’s prolonged economic crisis has significantly impacted Small and Medium Enterprises (SMEs). Many small business owners have struggled to repay bank loans, leading to widespread property seizures and auctions.
In response, the government had previously amended the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990, temporarily halting public auctions of seized properties until 15 December 2024. Jayatissa noted that SME associations have since requested an extension of this relief measure.
Highlighting the need for a long-term solution, Jayatissa stated that the government aims to foster an environment conducive to resolving loan defaults through a structured repayment plan rather than auctioning properties.
Accordingly, the Cabinet has approved a proposal by the President, in his capacity as the Minister of Finance, Planning, and Economic Development, to extend the suspension of the ‘Parate’ Law. Additionally, the Central Bank of Sri Lanka has been tasked with developing a comprehensive mechanism, involving public and private banks and other government institutions, to address the issue collaboratively.
