Sri Lanka Cabinet approves adopting new method to assess credit risks for financial institutions 

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved adopting a new credit risk assessment methodology for financial institutions in line with the Public Debt Management Act, Cabinet Spokesman Nalinda Jayatissa said.

This move involves assessing the risk associated with providing government guarantees or sub-loans to state-owned enterprises according to the provisions of the Public Debt Management Act passed under the previous government.

Cabinet Spokesmand said neither the Central Bank nor financial institutions that partially or fully lend or borrow for their own businesses are included in the definition of “Public Enterprises’ in the Public Debt Management Act.

“Therefore, there is a necessity to formulate an appropriate methodology for assessing the of credit risk in relation to providing guarantees or sub-loans, taking into account the unique nature of those institutes, higher level debt financing, liquidation and market risk, necessity of regulation and importance of their potential systems,” he said. (Colombo/October 20/2026)