The central bank's deputy governor Ranee Jayamaha said financial institutions cherry picked names when reporting defaulters to the bureau which keeps track of credit histories.

"The affluent borrowers, multinational companies, large corporate customers, highly connected borrowers and the banks' preferred customers do not get reported to the CRIB even if they default altogether,"Jayamaha said.

Jayamaha, who is also the head of the credit bureau, said they would hand out fines of 50,000 rupees (500 dollars) for each defaulter not reported by the credit bureau while bank managers also risked five-year jail terms for non-compliance.

Sri Lankan banks carry large amounts of bad debt, but more than two thirds of defaulters reported had taken small loans of less than a million rupees (10,000 dollars).