The Central Bank of Sri Lanka last week ordered the country’s banks to cut the annual interest rate they apply to credit card balances to 24% by the middle of October.
Sri Lankan banks typically impose rates ranging between 24% to 36% on credit cards, and this has prompted consumer groups to call for rate reductions.
This is the second time banks will have to lower rates. In December, the banking authority also ordered banks to lower card interest rates, which at the time were between 33% and 48% (
Sri Lankan banks issue some 1 million credit cards, according to the central bank.
Since February 2009, the central bank says it has cut the repurchase rate at which it injects money into the market by 300 basis points to 9%. “In response, the market interest rates have also adjusted downwards,” the bank noted in its latest order. The bank also noted that an improvement in the country’s overall economy meant that a further reduction in rates was in order.
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