Supervised by Supervised by Professor Suranga Silva - UOC

1. Prepared by
T.Wotsan & V.Keethopayan
MTEHM-2020
Department of Economics
UOC

2. Extension of debt moratorium for covid-19
affected businesses and individuals in the tourism
industry
 With a view to meeting the challenges faced by the tourism industry due to the
Easter Sunday Attack and the outbreak of COVID-19, the Central Bank of Sri
Lanka (CBSL) has implemented debt moratorium schemes since April 2019.
 Considering the ongoing travel restrictions, disruption to economic activities
and representations made by the Ministry of Tourism and related agencies,
CBSL requests licensed commercial banks and licensed specialized banks
(hereinafter referred to as licensed banks), to provide a debt moratorium to
COVID-19 affected businesses and individuals in the tourism sector
(hereinafter referred to as the Scheme) for a further period of six months
commencing from 1 October 2020 to 31 March 2021.

3. Extension of debt moratorium for covid-19
affected businesses and individuals in the tourism
industry
 CBSL observed that the proposed Scheme may not cause an undue level of
stress or threaten the stability of the banking system considering the lower
level of exposure to the tourism sector by licensed banks, the capital buffers
maintained by licensed banks and measures proposed by the Ministry of
Tourism to revive the tourism industry.
 Accordingly, this Circular is issued to give effect to the Scheme in a consistent
manner across all licensed banks.
 However, licensed banks may offer any additional concessions to borrowers in
a way that the overall benefits to borrowers are not less than the benefits
offered under this Circular.

4. General Terms and Conditions
 Eligible borrowers
 Businesses and individuals who are affected by COVID-19 and registered with:
 Ministry of Tourism
 Sri Lanka Tourism Development Authority
 Agencies under Sri Lanka Tourism Development Authority
 Local Government Authorities such as Pradeshia Sabha, Urban Council or Municipal
Council. However, such businesses shall now register with the relevant institutions
referred in i), ii) and iii) above
 Department of Cultural Affairs
 The Hotels Association of Sri Lanka
 Employees of eligible businesses who are affected by COVID-19. In the case of such
employees, the registration of the business with the relevant institutions referred in (a)
above shall be considered sufficient.

5. General Terms and Conditions
 Credit facilities to be supported under this Scheme shall include all performing
credit facilities as at 18 April 2019 or a later date, granted to eligible borrowers
and non-performing loans re-structured under Circular No. 05 of 2020 issued
on 27 March 2020.
 Debt moratorium refers to moratorium for both capital and interest for a further
period of six months commencing 1 October 2020 to 31 March 2021.
 Eligible borrowers who wish to avail the moratorium shall make a request
seeking such moratorium to the relevant licensed bank on or before 25
September 2020. Any eligible borrower who has the capacity to service the
loan repayment is expected to service such loan repayments instead of
requesting for this extension.
 Licensed banks shall accommodate such requests, considering the potential
repayment capacity of the borrower.

6. Structuring the Debt Moratorium
 Licensed banks shall convert the capital and interest falling due during the moratorium period
commencing from 1 October 2020 to 31 March 2021 into a term loan. Licensed banks may
amalgamate the capital and interest falling due during 1 April 2020 to 30 September 2020 with
the capital and interest falling due during 1 October 2020 to 31 March 2021, except for EMI
loans for which the interest rate for the moratorium period is capped at 7 per cent per annum.
 Such converted loan shall be recovered not earlier than 1 July 2021 onwards.
 Licensed banks may charge an interest rate for the converted loan, not exceeding the latest
auction rate for 364-days Treasury Bills, available by 1 April 2021, plus 1 per cent per annum.
 The repayment period of such converted loan shall be minimum of two years. However, if the
borrower wishes to repay the loan in less than two years or if the licensed bank wishes to offer
a longer period, licensed banks may facilitate such requests. Licensed bank and the borrower
shall agree on the interest rate, if the repayment period varies from the stipulated two-year
period.
 Licensed banks shall waive off the accrued and unpaid penal interest as at 1 October 2020, if
any, on performing and non-performing loans considered under this Circular. Penal interest
shall not be accrued and charged during the moratorium period.

7. Reporting Requirement
 Licensed banks shall report the details of moratorium availed by borrowers to
the Director of Bank Supervision as at 30th of each month, within 15 working
days commencing from 1 November 2020. A reporting format will be issued in
due course
Revocations
 Circular No 07 of 2020 dated 16 July 2020 on Relief Measures to Assist
COVID-19 Affected Businesses and Individuals is hereby revoked.
• Source
• https://www.cbsl.gov.lk/en/covid-19-debt-moratorium-and-banking-sector-regulatory-measures
• https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/cdg/bsd_circular_No_8_of_2020_e.pdf

8. New Loan Scheme Proposed By SLTDA
• June 11, Colombo: The cabinet of Ministers has approved a host of measures
to provide relief to 144,117 employees in the tourism sector affected by the
COVID-19 pandemic
• Issue loans at 4 percent interest for the payment of salaries to the employees of the tourist hotels,
Destination Management Companies and Travel Agents registered with the Sri Lanka Tourism
Development Authority (SLTDA) by March, 2019, up to Rs. 20,000 each for six months.
• The loan granted by state banks based on ETF/EPF records has a grace period of two years for
repayment and should be paid off in five years.
• Give a loan of Rs. 15,000 per month for six months to an employee of a restaurant, tourist friendly dining
establishment, fitness centers and spas registered under the Sri Lanka Tourism Development Authority.
• The issuance of Rs. 20,000 per person for SLTDA registered tourist guides and Rs 15,000 for registered
tourist drivers. Those allowances are given only once. Those allowances are given only once.
Cabinet approves Rs. 16 billion loan to provide relief for over 144,000 employees in tourism
sector affected by COVID-19

9. New Loan Scheme Proposed By SLTDA
 Allow the registered tourist hotels to settle their water and electricity bills for the
period between March 1, 2020 and August 31 in 12 installments after September 1.
The Ceylon Electricity Board and the National Water Supply and Drainage Board
have been instructed not to disconnect their services until such time.
 Increase the concession period to pay the tourism related rental taxes from six months
to 12 months.
 The relief scheme, Rs. 15,883 million is required to provide a loan to pay six months
salary to 131,497 hotel and restaurant employees.
Cabinet approves Rs. 16 billion loan to provide relief for over 144,000 employees in tourism
sector affected by COVID-19
• source - http://www.colombopage.com/archive_20A/Jun11_1591858442CH.php

10. Tour Guide Minimum wages
• Generally they are paid Rs.2500/= + commission on purchases by
visitors +
• free accommodation & meal, depending on the package they
agreed upon.
• Rs. 156 million is needed to pay the one-time only allowances of
Rs. 20,000 and Rs 15,000 for 9,216 guides and drivers respectively.
• source - http://www.colombopage.com/archive_20A/Jun11_1591858442CH.php

11. Hotel Staff Minimum wages Proposed by SLTDA
 issue loans at 4 percent interest for the payment of salaries to the employees of
the tourist hotels, Destination Management Companies and Travel Agents
registered with the Sri Lanka Tourism Development Authority (SLTDA) by
March, 2019, up to Rs. 20,000 each for six months.
 grant a loan of Rs. 15,000 per month for six months to an employee of a
restaurant, tourist friendly dining establishment, fitness centers and spas
registered under the Sri Lanka Tourism Development Authority.
• source - http://www.colombopage.com/archive_20A/Jun11_1591858442CH.php

12. Thank You
Prepared by
T.Wotsan & V.Keethopayan
MTEHM-2020
Department of Economics
UOC