COMBank first to activate new World Bank credit line for SMEs

The Commercial Bank of Ceylon Plc, one of the leading providers of development credit in the country, has become the first institution in Sri Lanka to participate in the latest World Bank-funded Small and Medium Sector Development Facility (SMEDeF) for the development of Small and Medium Scale Enterprises (SMEs), further extending its support to this sector.

Development loans worth nearly Rs. 3 billion are to be disbursed under this credit line by Participating Credit Institutions (PCIs).

The Commercial Bank entered into an agreement with the Government recently becoming the first PCI to do so out of the eight PCIs – three State and five private banks – invited by the Project Implementation Unit (PIU) of the Department of Development Finance of the Ministry of Finance and Planning, to formalise proceedings to commence disbursements.

The bank has already commenced accepting and processing of applications for this credit facility.

SMEs with an annual turnover of less than Rs. 300 million operating in the manufacturing and service sectors are eligible to apply under this facility for development loans. A floating interest rate linked to the Average Weighted Deposit Rate of the Central Bank applies for these loans. This rate is in single digits at present, the bank said.

Purchase of plant, machinery, commercial vehicles and other fixed assets, permanent working capital requirements and construction of factory buildings can be financed through this facility.

Borrowers can also obtain technical advice from the Commercial Bank. The technical assistance facility includes comprehensive workshops at which participants will be educated on aspects crucial to the success of their enterprises.  

A maximum of Rs. 60 million will be available to a single applicant under this project. The repayment period for those who obtain loans exclusively to fulfil working capital requirements is three years. For those who obtain loans for other eligible requirements the repayment period is 10 years, inclusive of a two year grace period.

The Development Credit Department of the Commercial Bank possesses extensive experience in development lending, being among the very few banks in the country that have participated in every Refinance Loan Scheme since the inception of the first such scheme in 1979.