Sri Lanka’s financial market regulator had added a new regulation to the industry by directing finance companies not to give loans to borrowers in tourism related businesses unless they have a license, Sri Lanka’s Tourism sector regulator Sri Lanka Tourism Development Authority had said.

Reports reveal that the move has come at a time when the government officials including Tourism Minister recently forecasting that Sri Lanka is looking at Tourism revenue in the excess of US $ 5.9 billion for 2018 end and US $ 6.5 billion for 2019 end and a target of US $ 7 billion for 2020.

Reports points out that the Central Bank of Sri Lanka had written to the Finance Houses Association Sri Lanka saying “It is mandatory for all tourism related businesses to register with the Sri Lanka Tourism Development Authority under Tourism Act No 38 of 2005.

"The SLTDA has also had discussions with the Central Bank to ensure that the commercial banks too consider the SLTDA license as a pre-requisite for granting loans to tourism related businesses," the regulator had said.

According to analysts Sri Lanka’s small and medium sector tourism sector had thrived under post war climate encouraging medium and micro entrepreneurs to come up from the tourism sector creating new jobs in the industry. However several market analysts outline that major tourism sector and leisure sector billionaires who control the major city and mega hotels as well as major locally founded hotel chains in Sri Lanka had gained direct and indirect influence over the country’s banking and finance sector through ownership of major stakes in partly privately owned licensed commercial banks, and having their immediate siblings on banking boards, perhaps without even having majority share ownership. Accordingly, the move had lead small, medium and micro sector tourism entrepreneurs’ borrowing capacity and opportunities limited through the influence that tourism sector billionaires have on the banking and finance sector boards and management. Analysts opine that Sri Lanka had also witnessed during last 5 years country's several largest privately owned Licensed Commercial Banks had witnessed 'Political Nepotism' that resulted in appointing key management individuals connected to tourism sector politicians or politicians via state or business mogul intervention using the government controlled or business moguls controlled stakes in those banks. During the past few years analysts also highlight that Sri Lanka’s traditional tourism moguls who had emerged as billionaires had influenced on government policies in controlling new innovative ventures in tourism sector through new taxes that were came in to effect on online travel agencies, that had started to offer attractive offers for tourism and leisure properties in the country during the last decade. Analysts also highlight that the moves came after traditionally emerged tourism sector billionaires witnessed heavy competition from small and medium sector properties and when they witnessed they lost the higher margin they could gain by selling rooms to domestic and foreign visitors via traditional marketing methods. Sri Lanka had earlier gazetted a set of state-mandated requirements for graded hotels in an era where booking engines were making facilities transparent.

The requirement to get registration for getting loans will add yet another barrier to getting access to credit for small tourism businesses in particular, despite country’s current government continue to market Sri Lanka as destination famous for ease of doing business and reduce time and steps in starting and running businesses. However the tourism regulator had launched an Online Tourism Business Licensing System (OTBLS) to make it easier for entrepreneurs.