The Council of Ministers approved the extension of the moratorium on the execution of the “Parate” law, which prohibits banks from acquiring creditors’ properties, until March 31, 2025.

Announcing this week’s Cabinet decisions this morning (10), Cabinet Spokesperson, Minister Nalinda Jayatissa said the economic crisis Sri Lanka has faced over the past 04 years has seriously affected the Small and Medium Enterprises (SMEs), and it has been reported that Small and Medium Enterprises (SMEs) and mid-sized entrepreneurs have faced difficulties in settling loans obtained from banks.

In this situation, an environment was created in which the properties of a significant number of businessmen were repossessed by banks and auctioned due to defaults, and as a result, the sale of properties to Public auction has been temporarily suspended until December 15. 2024 by amending the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990, the minister added.

Furthermore, Jayatissa expressed that requests have been made by associations related to SMEs to further extend the moratorium on the execution of the “Parate” law.

Furthermore, the Cabinet spokesperson noted that the government observed that it was more appropriate to create the necessary environment to achieve a positive solution for both parties by introducing an action plan for the reimbursement of these defaulted loans rather than allowing properties to be auctioned off.

Accordingly, the Council of Ministers approved the proposal presented by the President in his capacity as Minister of Finance, Planning and Economic Development to extend the suspension of the execution of the “Parate” law until March 31, 2025 .

Furthermore, it was also approved that the Central Bank of Sri Lanka prepare a multi-dimensional mechanism to address this issue with the active participation of all stakeholders, including public and private banks and other government institutions.