CB’S LTV tweak­ing un­likely to lift elec­tric ve­hi­cle mar­ket

Daily Mirror (Sri Lanka) - - LATE CITY -

De­spite the Cen­tral Bank last week is­su­ing direc­tives to the banks and fi­nance com­pa­nies to sig­nif­i­cantly lift the re­stric­tions on leas­ing on elec­tric mo­tor ve­hi­cles to align with the en­vi­ron­men­tal­ist spirit of the 2018 bud­get, the stake­hold­ers were of the view that this would not lead to a boom in the elec­tric ve­hi­cle mar­ket with­out fur­ther ad­just­ments.

The max­i­mum loan-to-value ra­tio (LTV) for elec­tric com­mer­cial ve­hi­cles, cars, SUVS, vans, three­wheel­ers and any other elec­tric ve­hi­cle are now 90 per­cent of mar­ket value, if the ve­hi­cles are un­reg­is­tered or have only been in use in Sri Lanka for less than one year, af­ter the first reg­is­tra­tion.

The bud­get speech had only in­cluded this new LTV ra­tio for elec­tric busses and three-wheel­ers, as well as do­mes­ti­cally as­sem­bled three­wheel­ers, cars and buses. The Cen­tral Bank has not set such a restric­tion.

Fur­ther, the Cen­tral Bank has also in­tro­duced a 70 per­cent LTV ra­tio for hy­brid cars, SUVS and vans, which too was not pro­posed in the bud­get.

For non-elec­tric or hy­brid ve­hi­cles, the older LTV ra­tios im­posed in Jan­uary 2017 still stand, with a 90 per­cent LTV for com­mer­cial ve­hi­cles, a 50 per­cent LTV for cars, SUVS and vans, a 25 per­cent LTV for three­wheel­ers and a 70 per­cent LTV for other ve­hi­cles.

Mean­while, for reg­is­tered ve­hi­cles, which have been used for more than one year af­ter the first reg­is­tra­tion, a max­i­mum LTV of 70 per­cent was main­tained by the Cen­tral Bank.

“The lim­its will not be ap­pli­ca­ble to credit fa­cil­i­ties granted to any com­pany en­gaged in tourism and/ or trans­porta­tion for pur­chase of ve­hi­cle fleets to be uti­lized for their core busi­ness op­er­a­tions, pro­vided that such ve­hi­cles fi­nanced will not be trans­ferred to any per­son or en­tity within one year from the date of the first reg­is­tra­tion,” the Cen­tral Bank said.

For these ex­empted pur­poses, the banks and fi­nance com­pa­nies are re­quired to place in­ter­nal lim­its and risk man­age­ment strate­gies, the Cen­tral Bank di­rected.

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