Sri Lanka will provide interest relief for pawn advances up to Rs. 100,000, as announced by Cabinet Spokesperson Minister Bandula Gunawardena. This measure is aimed at assisting low-income families struggling with high interest rates on pawning advances.
The Cabinet has approved a program through the General Treasury to grant interest relief of up to 10% annually for pawn advances obtained from licensed commercial banks on or before June 30, 2024.
The ongoing economic crisis has severely impacted all sectors, leading to an increase in gold pawning as families face financial hardship. Central Bank statistics reveal a dramatic rise in pawn advance arrears, from Rs. 210 billion in 2019 to Rs. 571 billion by March 2024—an increase of 172%. Additionally, pawn advances grew from Rs. 411 billion at the end of 2022 to Rs. 546.7 billion by the end of 2023, marking a 33% year-on-year increase.
Given these circumstances, licensed banks have recognized the need to offer relief to low-income communities affected by high pawning interest rates. However, the government will not be able to extend this relief to pawning advances obtained from non-bank institutions.