Special credit support scheme to SMEs

Special credit support scheme to SMEs

Special credit support scheme to SMEs

Written by Staff Writer

10 Feb, 2020 | 9:01 pm

Colombo (News 1st): The Central Bank issuing a statement today (Feb 10) said, that licensed commercial banks have agreed to provide a special credit support scheme to eligible Small and Medium Enterprises during the time period of 1st January 2020 to December 31st 2020 to complement the fiscal incentives already announced by the Government.

The statement added, based on the discussions the Central Bank of Sri Lanka had with the licensed banks, it is observed that the proposed scheme may not cause an undue level of stress or threaten the stability of the banking system.

Accordingly, borrowers with an annual turnover of Rs. 16 million to Rs. 750 million for the year ended 31.12.2019 are eligible for the program.

However, in the case of SMEs which are in the NPL category as at 31.12.2019, the lower limit of annual turnover, i.e., Rs. 16 million, shall not apply.

In the event borrowers fail to service interest, licensed banks have been instructed to initiate appropriate risk mitigation processes against such companies.

Further, the Government and CBSL will formulate a Credit Guarantee Scheme to provide risk mitigation arising from any additional loans and advances for up to 75% of the capital sum granted by licensed banks.

The statement adds, licensed banks are expected to have a mechanism not to decline loan applications solely based on an adverse CRIB record.

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