Private Sector Lending Surges, Boosting Households and Agriculture

Sri Lanka’s private sector credit expanded sharply from April to September 2025, with agriculture and personal loans leading the recovery after early-year contractions, according to CBSL data. Agriculture lending rebounded from net repayments of Rs. 14 billion in June to inflows of Rs. 35 billion in August, while personal loans rose to 26% of total credit by September.

Industry remained the largest recipient of new loans, and services lending showed volatility, reflecting trade and transport demand. Total monthly credit flows reached Rs. 231 billion in September, contributing to a 22.1% year-on-year rise in outstanding private sector borrowings to Rs. 9.52 trillion.

CBSL Governor Dr. Nandalal Weerasinghe noted that while the surge supports household liquidity and rural credit, it does not yet indicate economic overheating. Analysts caution that rapid lending growth could pose risks if macroeconomic conditions worsen, but the broader credit distribution may boost inclusive growth and strengthen the economy’s resilience in 2025.

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