The Sri Lankan cabinet has greenlit a temporary halt to the enforcement of the parate law, aiming to alleviate the strain on small and medium-sized enterprises (SMEs) grappling with financial challenges. President Ranil Wickramasinghe, who doubles as the Minister of Finance, proposed the suspension in response to mounting concerns raised by SMEs.
The parate law permits banks and financial institutions to seize assets, including land and property, from borrowers defaulting on loans. However, its application has been criticized for exacerbating hardships faced by SMEs. In acknowledgement of these concerns, the government announced its decision to suspend the law until December 15, 2024.
The move is designed to offer respite to struggling SMEs, enabling them to navigate operational difficulties more smoothly. Additionally, the government intends to present proposed amendments related to the suspension to Parliament for review and potential implementation, aiming to provide lasting relief to the SME sector.
