In the wake of the devastating economic meltdown in Sri Lanka amidst the COVID-19 contagion, the government had decided to provide a grace period to settle the debt obtained from commercial banks.
However, tables took a turn as the government was accused of not providing the grace period as promised.
Fueling further controversy, a customer for the first time has lodged a lawsuit in the Colombo Commercial Court, in the allegation that he had not received the Central Bank relief package.
The lawsuit was filed citing the Commercial Bank of Ceylon, the Central Bank of Sri Lanka (CBSL) and the Attorney General as respondents by Nandana Priyanga Dasanayake, a resident of Marapola, Veyangoda, who is a professional commercial pilot in Vietnam.
On 20.03.2020, Governor of CBSL Prof. W.D. Lakshman had informed via circular to provide a relief package to the customers, backed by the approval of the Cabinet under the order of the President.
However, no such relief package was received, Dasanayake alleged, adding that his bank had compelled him to recover the penalty for non-payment of the debt obtained during the COVID grace period, which according to the complainant is a far greater figure than that of regular penalty charges.
According to the guidelines by the CBSL to commercial banks, a fiscal body can only charge penalty interest for the period in which the relevant concession was granted, he pointed out.
But it was revealed that most banks charge interest on the entire debt arrears over the entire period.
Many commercial banks (especially leasing companies) have been accused in the recent past of taking advantage of this debt relief by adding interest to the entire amount of debt, instead of the rate due for the designated period.