Commercial banks are currently charging an interest rate exceeding 15.5 percent on the loan installments of their customers if they delay payment even by a day.

Many people have taken personal and real estate loans at fixed interest rates, and they are compelled to face this predicament due to the rigid regulations imposed by banks.

Due to this situation, those who are late in paying their loan installments have to pay more than the usual installment, and this has caused great distress to salaried employees in the public and private sectors, banking and financial market sources said.

In general, the annual interest rate of loans from public and private banks in Sri Lanka has been below 10 percent, and there are many applicants who have obtained loans at fixed interest rates.

Some people working in the public and private sectors have their loan installments deducted from their salaries on the due date, and some people pay their loan installments through standing orders or other methods.

In view of the current inflationary situation, the banking sector has estimated that the loan interest rate (the average weighted lending rate) is about 15 percent in relation to the existing interest rates, and for this reason, the heads of public and private banks in Sri Lanka have come to an agreement to charge a minimum interest rate of 15.5 percent on default payments to cover the costs of loan installments that are delayed by even one day.

Banking sources said that the approval or advice of the Central Bank had not been obtained to implement their decision.

These sources also mentioned that although the minimum rate is 15.5 percent, most delinquent loans are charged an interest rate of 21 to 22 percent.

Accordingly, a person who has obtained an amount of 5 lakh rupees at an average annual interest rate of 9 percent has to pay a loan installment of 12667 rupees if he misses the payment of the loan installment of 10309.18 rupees.