The Central Bank of Sri Lanka (CBSL) said the country’s financial system remained stable in the first half of 2026, in its annual Financial Stability Review released on Monday.
The CBSL said stability was supported by continued economic recovery, adequate capital and liquidity buffers at banks and finance companies, and improved fiscal performance. The report generally covers data up to the end of June 2026.
It said credit growth, particularly vehicle financing and gold-backed lending, continued to widen the private sector credit gap, and that rising household indebtedness and real estate prices were emerging risks.
The CBSL raised the overnight policy interest rate in May 2026 and introduced loan-to-value limits on vehicle and gold-backed lending to contain these risks.
The review said the rupee depreciated against the US dollar during periods of pressure linked to tensions in the Middle East, before conditions improved with remittances, tourism and export inflows.
It also said banks’ capital buffers remain well above regulatory thresholds, though capital adequacy ratios declined as risk-weighted assets grew faster than capital.
The full report is available on the CBSL website.
