The Central Bank of Sri Lanka issued broad guidelines to licensed banks on March 28, 2024, to further strengthen the functions of already established Post COVID-19 Revival Units and reformulate such units as Business Revival Units (BRUs).
Licensed banks are required to establish BRUs by mid-May 2024, and be fully compliant with the requirements of the Circular by 01 July 2024. The enhanced scope of proposed BRUs will facilitate sustainable revival of viable businesses affected by the extraordinary macroeconomic conditions and ensure the proper handling of the increased impaired assets of licensed banks. The Central Bank sought relevant stakeholder views including the banking industry and the Chamber of Commerce, when formulating these guidelines.
The challenging macroeconomic conditions prevailed during the recent years have led to disrupting the income generating activities of businesses, adversely impacting the ability of borrowers to duly repay their loans and thereby impairing the recovery process of licensed banks. Thus, the setting up of BRUs is considered imperative to assist both performing and non-performing borrowers of licensed banks whose businesses are fundamentally viable to revive.”
“Large banks with more than 50 branches, may consider establishing BRUs at large branches/regional offices of banks, in order to support revival of businesses of affected borrowers more effectively and efficiently.”
Fundamental viability of a business is a key factor for the consideration of business revival by a licensed bank. In the viability assessment, both financial and non-financial indicators are taken into consideration. The Central Bank of Sri Lanka requests both licensed banks and concerning borrowers to effectively collaborate to ensure viable businesses are revived in a sustainable manner to benefit the borrowers, resulting in enhanced economic activities and contribute to the development of the national economy.
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