While 2025 has been a year of recovery, the Central Bank of Sri Lanka (CBSL) has issued a prudent warning regarding underlying credit risks. In its latest Financial Stability Review, the CBSL highlighted that while liquidity has improved, the “quality” of credit remains a concern due to the lag effect of previous economic contractions.
Banks are being advised to maintain strong capital buffers and exercise caution in aggressive lending. “The rebound is real, but we must ensure it is sustainable. We cannot afford a new bubble in consumption credit,” the Governor remarked during the report launch.
References:
- Central Bank of Sri Lanka (Publications): https://www.cbsl.gov.lk/en/publications/economic-and-financial-reports
