Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

Sri Lanka Equity Analytic
සිංහල පරිවර්තනය
Search
 
 

Display results as :
 

 


Rechercher Advanced Search

Latest topics

» Market Sell Off
by kovida Today at 4:03 pm

» Keep Eye On Sira.......
by sapumal Today at 11:30 am

» Abans in mega Shopping Mall project : Fitch report
by fortuneteller Today at 10:14 am

» Wiser's TA Chart Room
by wiser Today at 9:54 am

» Daily News Bulletin | දිනපතා ප්‍රවෘත්ති
by Sstar Today at 9:51 am

» VONE , is it time to sell or holds
by Yahapalanaya Today at 4:22 am

» TFCX.000 collecting.....
by anges Today at 12:33 am

» Silent ABL
by Ahcha Yesterday at 2:03 pm

» ABANS FINANCE PLC IN DEEP TROUBLE?
by fortuneteller Yesterday at 1:06 pm

» Arpico Insurence
by sureshot Yesterday at 12:10 pm

» Sri Lanka's Sampath Bank net up 52-pct in Dec
by MAKARA Yesterday at 9:50 am

» Another ALHP Drama Staging on
by wisdom79 Yesterday at 7:30 am

» ALHP WILL MOVE UP SOON
by wisdom79 Sun Feb 18, 2018 9:25 pm

» Tips For Avoiding Excessive Trading ;)
by CubedSol Sat Feb 17, 2018 2:15 am

» IMPACT OF ELECTION RESULTS - one more hour to analyse
by soileconomy Fri Feb 16, 2018 9:22 pm

» Keep Eye on RIL
by Ran49 Fri Feb 16, 2018 5:52 pm

» Risk Management !!!!!!!!!!!!!!!!!!!>>>>>>>>>>>>>>>
by wiser Fri Feb 16, 2018 3:53 pm

» GREG & TAP DISCLOSE
by wiser Fri Feb 16, 2018 2:03 pm

» SCAP - SOFT LOGIC CAPITAL
by Ran49 Fri Feb 16, 2018 7:08 am

» Thx for all...
by Uaecoindubai Thu Feb 15, 2018 7:07 pm

Forum Disclaimer

The information contained in this forum have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein.

www.srilankaequity.com its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever.

Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, www.srilankaequity.com its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market News » CB’s vehicle import directive to have ripple effect on economy

CB’s vehicle import directive to have ripple effect on economy

Go down  Message [Page 1 of 1]

Melissa Pereira


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
The Leasing Asso-ciation of Sri Lanka (LASL) cautioned that the directive enforced by the Central Bank to have maximum loan-to-value (LTV) at 70% on vehicle imports with effect from yesterday would have a ripple effect on the economy.


The Central Bank yesterday directed finance companies not to provide any vehicle loans amounting to more than 70% of (the loan to value ratio) of the price of a vehicle.
 LASL President Nishaman Karunapala told the Daily FT that the effect of the directive would flow into all segments of the economy.  



He further stated that the impact would be felt when the industry limits to finance the SME sector and their contribution to the economy declined.   



“This is definitely going to affect the entire industry, especially the SME sector which cannot afford to obtain a leasing or a loan facility to purchase vehicles. It will also curtail the leasing and vehicle lending book growth, long-term industry growth and the economy as well,” he added.



When asked if the LASL was informed of the directive prior to it being made public, he said that they were taken aback by the sudden decision. 
“The Central Bank would have done their studies in this regard, but we are still puzzled as to why they implemented it,” he noted. 



However, explaining that they had no option left other than to adhere to the regulator’s decision, Karunapala said that after meeting the association members on 17 September and reviewing the members’ comments they would certainly make a representation.
“We will definitely ask for some concessions. Non-bank finance companies are the key financiers of vehicles and this was the driving force behind many financial institutions,” he revealed.



Noting the positive aspect of the directive made by the Central Bank, the LASL President asserted that the NPL ratio would decline. 
“With customers compelled to pay an upfront payment of 30% when obtaining a facility, it will create some financial discipline in the leasing and finance industry. This way their commitment is greater and it also helps to safeguard the depositors’ money at the end of the day,” Karunapala added.



Vehicle Importers Association of Lanka (VIAL) President Indika Sampath said that they would support the policy direction the Government had taken to curb vehicle imports as it was the need of the hour from a macroeconomic perspective.
“Although there is a direct impact to our business from this directive, we feel that this is important for the country to have a balance in the economy. In that light we would adjust to the situation,” he added.



However, he pointed out that it was not fair to enforce the directive for vehicles that were already registered. 



Noting that there would be a significant drop in vehicles that were imported from Japan, Sampath said that there would also be a drastic drop in vehicle imports from India, especially in vehicle brands such as Maruti and in three-wheelers.



Senior economist Deshal de Mel asserted that the Central Bank’s directive to tighten credit growth was necessary to curb the unsustainable level of vehicle importation. 
“There has been significant growth in vehicle imports during the first six months of the year which was largely driven by credit. This has put pressure on the trade deficit, which expanded by 15%, despite a 42% drop in expenditure on fuel during the first half of the year (January to June) causing rupee depreciation pressure as well. Therefore, it was necessary to tighten credit growth to address imbalances developing in the external sector,” he explained.



According to the Central Bank’s External Sector Performance review in June, expenditure on imports increased by 13.5% y-o-y to $ 1,633 million. This growth was led by vehicle imports for personal usage categorised under consumer goods, which increased by 110.1% due to higher importation of motorcars and motorcycles, and vehicles imported for business purposes categorised under investment goods, which increased by 238.6% due to higher importation of auto trishaws and other motor vehicles. 
Courtesy: Daily Financial Times 16 September 2015

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum