People’s Bank extends attractive loan schemes to benefit SME entrepreneurs
Tuesday, 22 October 2013 00:37
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Small and Medium Scale Entrepreneurs are the backbone of the nation’s economy and People’s Bank is playing a significant role in supporting the aspirations of this segment by launching a number of schemes to empower budding entrepreneurs.
The Government of Sri Lanka has pledged support to this vital segment of the economy through the years and President Mahinda Rajapaksa even invited the country’s banking network to join hands in this endeavour. In response to this call to action, People’s Bank took up the challenge and is steadily delivering this promise through unique loan schemes.
As per the budget proposal in 2011, People’s Bank opened separate service centres especially for the convenience of small and medium scale entrepreneurs. In accordance with this proposal, Peoples’ Bank took measures to open seven Special Units in every district, one unit per district, especially for the benefit of the small and medium scale entrepreneurs.
In addition to the 732 branches of People’s Bank, these Special Units were established to avoid difficulties that may arise in carrying out other general banking operations along with the services related to small and medium scale entrepreneurs.
Special facilities
The sole responsibility of these service centres is to provide the entire gamut of required banking services to small and medium scale entrepreneurs. In addition to normal banking operations, special facilities of other services are being extended to the entrepreneurs, which are not usually carried out at the other branches. Customers wishing to start or enhance a business, industry or self-employment project can access speedy loans from People’s Bank, which also arranges a number of value added facilities and services such as financial management education, technical training resources, market information and so on.
These value-added services ensure the entrepreneur is able to build a sustainable business. People’s Bank has dynamic plans to expand these special banking units for small and medium scale entrepreneurs even further by the end of this year.
Small and medium scale business ventures: Criteria for eligibility
In Sri Lanka, businesses that record an annual turnover of less than Rs. 600 and million and if the loans obtained are less than Rs. 200 million, it is considered as small and medium businesses. In accordance with this segregation, 90% of local businesses fall under the category of small and medium scale business projects.
This is a priority category for People’s Bank and thus any potential area such as agriculture and agri related industries, fisheries industry, production and services, commercial activities and so on are absorbed into the small and medium scale loan schemes.
Special facilities available
Peoples’ Bank has made arrangements for small and medium entrepreneurs to receive many special facilities. In general, two factors are mainly looked into when considering a loan. The first is the repayment capacity and the second is the securities. But small and medium scale entrepreneurs are given special consideration while being granted loans.
Their repayment capacity is calculated depending on cash flow and the amount of the loan, with less attention given for securities. At the same time, a longer repayment period is considered. A period up to 10 years is granted for repayment and a very nominal rate of interest is applied. People’s Bank also facilitates a grace period before the first instalment is needed, if required.
With a view to obtaining the direct involvement of all small and medium scale entrepreneurs for the economic development of this country, steps are taken to join hands with many establishments in carrying out this process. Workshops called ‘Viwasayaka Udanaya’ (entrepreneurial glory) are also arranged to enlighten and encourage the customers and entrepreneurs.
Thus far, these workshops have been conducted in seven districts. Developing agriculture and industry and enhancing the monitory requirements of the rural folk are the main objectives of People’s Bank and since these objectives run parallel to this program, the small and medium scale entrepreneurs project has become a success.
Loan Schemes
People’s Bank activates many loan schemes for small and medium entrepreneurs:
nThe Small and Medium Scale Commercial Loan Scheme is a popular one amongst this segment of customers. Long term loans are granted at a nominal rate of interest.
nLoans are also granted through the ‘Mahajana Ayojana Saviya’ scheme at concessionary rates of interest. The minimum repayment period is five years, making it a good opportunity for businesses requiring long term investments.
nCommercial Scale dairy Development loan scheme. A loan granted for infrastructure for liquid milk production or any related product functions in accordance with this scheme is available and offers a special interest rate as low as 8%.
n‘Saubagya’ is yet another very special scheme which caters to any kind of fund generating or self employment project for which a very nominal interest rate is levied.
nThe ‘Smile’ program offers a loan of Rs. 5 million at a concessional rate of interest for industries.
nIn order to establish a process to obtain a favourable price for paddy, the ‘Idiri Velanda Givisuma’ is available for those who wish to buy paddy.
nThe ‘Vee Udapana Naya’ scheme is given to ensure a fair price for paddy. It is a remarkable fact that all these schemes levy exceptionally concessionary rates of interest.
Further Information
Further details about any of the loan schemes can be obtained from managers of any of the 732 People’s Bank branches island-wide, or from any of the Small and Medium Scale Entrepreneurs Units in every district or from the Special Unit which is set up for this purpose at the Head office.
