Can You Get a Bank Loan for Unapproved Plan in Sri Lanka?
December 25, 2025
Can You Get a Bank Loan for Unapproved Plan in Sri Lanka?
The short answer: No. The long answer: Maybe, but it's expensive.
Banks are regulated by the Central Bank. They cannot lend money against an asset that is not legally compliant. An "Unapproved Plan" means the local council hasn't verified the boundaries or buildability.
1. Why Plans are Unapproved
- Partition Lands: Old family lands divided without council approval.
- Small Lots: Lots smaller than 6 perches (often rejected by UDA).
- Street Line Violations: Plan ignores road widening.
2. The Bank's Stance
- National Banks (BOC/Peoples): Strict NO. They require a plan approved within the last 10-20 years.
- Private Banks: Strict, but may consider if you have other collateral (cash/other land).
- Finance Companies: Some might consider it, but at much higher interest rates (18%+), and they will value the land at 50% of market value ("Distress Value").
3. The Solution: Get it Approved
If you are buying, insist the seller gets it approved.
- Hire a Surveyor to draw a fresh plan.
- Submit to Municipal Council.
- Wait 2-4 weeks.
If the Council rejects it (e.g., due to size), walk away. If the Council won't approve it, you can't build legal structures on it, and resale will be a nightmare.
4. Exception: "Prescriptive Title"
If a plan is very old (e.g., 50 years) and the Council records are lost, but there is a clear prescriptive title (Jayaboomi), some banks may accept it with an Indemnity Policy (Title Insurance).
Don't buy a headache. Verified Approved Lands