Maximum interest rate imposed on pawning advances of licensed banks

Tuesday, 28 April 2020

The Central Bank of Sri Lanka has imposed a maximum rate of interest chargeable by licensed banks on the money lent on the security of personal articles made of gold accepted as a pledge for pawning to be 12% per annum or 1% per month if the pawning period is less than one year, with effect from 27 April 2020.

The Central Bank observes that the current interest rates charged by licensed banks on pawning advances range from 12% – 17.5% per annum.

Considering the necessity to provide relief to low income individuals who are pawning gold jewellery to meet their short-term financing needs due to the adverse economic situation resulting from the COVID-19 outbreak, the Monetary Board of the Central Bank of Sri Lanka has decided to impose maximum interest rates on pawning advances of licensed banks.

Accordingly, an Order under the Monetary Law Act was issued to the licensed banks requiring to fix the maximum rate of interest chargeable by them on the money lent on the security of personal articles made of gold accepted as a pledge for pawning to be 12% per annum or 1% per month if the pawning period is less than one year, with effect from 27 April 2020.