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Dec 19, 2011 (LBO) – Sri Lanka’s central bank has lifted a 5.0 percent limit on margin loans by saying a correction in stock prices showed that the danger of an asset price bubble has passed.

The central bank said declining earnings multiples of firms and lower utilization of margin credit showed that banks were managing risks prudently.

The central bank said lenders could set their own internal limits for margin loans.

Margin loans are in demand when markets go up.

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