Seylan Bank continues to empower tea smallholders to cultivate success

For generations, tea has been intricately woven into the socio-economic fabric of Sri Lanka. In 2022, Sri Lanka’s tea exports earned a record Rs. 411 billion according to the Sri Lanka Tea Board. While large-scale company-owned and managed plantations have historically dominated tea production, today over 400,000 tea smallholders island-wide contribute significantly, accounting for 74% of the country’s tea production.

Of Sri Lanka’s arable land, 16% is allocated to the tea sector, with tea smallholders occupying 60% of this land. According to the Tea Control Act, tea lands spanning from 20 perches to 10 acres are designated as ‘Tea Small Holdings’ across the nation. An interesting aspect of tea smallholders is that a majority of them serve as both managers and harvesters of their own lands.

However, despite their vital role, tea smallholders face a variety of challenges. Nurturing the growth of these farmers requires improving their status, enhancing income, and providing education and development opportunities.

Tea smallholders also encounter a range of financial restrictions, including limited access to alternative credit sources within local areas, the absence of financial products tailored to their needs, and often high costs associated with borrowing.

Seylan Bank recognises the important role played by the Small and medium-sized enterprises (SMEs) in driving the country’s economy, with special emphasis on supporting the tea smallholders as a key target group. The bank also understood that traditional financing methods of tea smallholders were constrained, largely due to perceived high credit risks and the mismatch of financial products. Thus, the bank is committed to helping tea smallholders in overcoming traditional financial challenges and empowering them to thrive in their endeavours.

As a multinational financial institution, the Asian Development Bank (ADB) has continuously supported the country’s SME sector offering a range of lending products and providing capacity-building assistance. Renowned for its expertise in supporting SMEs, Seylan Bank, joined hands with the ADB and the Ministry of Finance as a participating financial institution to help the development of Sri Lanka’s tea smallholders. ADB, in collaboration with the Development Finance Department (DFD) of the Ministry of Finance, introduced a credit line to further the initiative.

Notably, among the five participating banks, Seylan Bank was entrusted with the highest disbursement amount for tea smallholders in 2022. This highlights the bank’s pivotal role as a prime driver for fostering the advancement of tea smallholders throughout the nation.

To-date Seylan has successfully disbursed the first and second tranches of the credit line amounting to Rs. 442 million, in addition to grants of Rs. 36 million, demonstrating an unwavering commitment to sustain the tea smallholders.

Moreover, Seylan Bank has facilitated ADB training programs enabling the tea smallholders to enhance their skills. Those who participated received further impetus by having to produce the program certificate to receive an increased 20% in grants.

The Seylan team collaborates closely with tea smallholder associations, conducting on-site visits to develop financial literacy programs. The bank also organises nationwide SME seminars, highlighting tea-related discussions and empowering women-led businesses in both the tea industry and SME sector.

Furthermore, the bank also provides valuable assistance through various initiatives and specialised financial solutions including tailoring financial products. To address the unique needs of tea smallholders, competitive loan facilities are offered with favourable interest rates, and transactions facilitated through a vast global network. In supporting women entrepreneurs, the bank has also disbursed approximately Rs. 33 million in grants under the ‘Dinana Aya’ program, contributing to a total allocation of around Rs. 700 million for ongoing projects

Additionally, Seylan Bank’s innovative ‘Export Expert’ service is designed to revolutionise the export sector, providing tailored financial solutions for both established exporters and budding entrepreneurs aiming for global expansion. The service is poised to play a significant role in bolstering Sri Lanka’s economy by fostering entrepreneurship, facilitating international trade, and promoting financial prosperity. With competitive exchange rates, attractive loan options, exclusive benefits via Seylan Business Banking, access to a vast international network, online payment facilitation to authorities, and dedicated support, Seylan Bank’s Export Expert service empowers export businesses to reach new heights and succeed in the global arena.