Sri Lanka, March 28 -- The Central Bank has been caught off guard by the break in the months-long expansion seen in the private sector credit in January and considered it to be a one-off development and attributed it to the appreciation of the rupee and after-season settlement of facilities by the borrowers.

The seven-month-long streak in the continuous growth in the credit offered to the private sector from the licensed commercial banks (LCBs) broke down in January, when the net credit to the private sector contracted by Rs.52.2 billion, after growing by slightly over Rs.100 billion in December 2023.

While some market analysts attributed the aberration at the time to the importers frontloading import-related facilities going into 2024,...