Interest-free loans under Agricultural Modernisation Program

• Bank of Ceylon and Regional Development Bank inks MoU with Agriculture and Plantation Industry Ministry; additional MoU with People’s Bank to follow soon

In a significant step towards boosting the country’s agricultural sector, a Memorandum of Understanding (MoU) was signed yesterday at the Presidential Secretariat to provide interest-free loans to agribusiness entrepreneurs and farmers, marking the first phase of the Agriculture Modernisation Program.

The MoUs were signed between key stakeholders, including the Bank of Ceylon and the Regional Development Bank, along with Agriculture and Plantation Industry Ministry Secretary Janaka Dharmakeerthi. Another MoU with the People’s Bank is expected to follow soon.

Under this initial phase, Rs. 650 million was allocated to fund projects through agricultural modernisation centres in 26 selected Divisional Secretariat (DS) divisions. 

Interest-free...

A total of 75 DS divisions have been identified for these pilot projects. The financial structure of these projects ensures that over 30% of the costs are borne by agribusiness entrepreneurs and farmers, while the remaining 70% is funded by the Government.

The scheme facilitates a revolving credit mechanism where the Government’s contribution is provided as an interest-free loan under the Agricultural Modernisation Credit Scheme. This loan can be recovered by a bank chosen by the beneficiary from the Bank of Ceylon, People’s Bank, or the Regional Development Bank. This system was established and approved through a Cabinet memorandum presented by President Ranil Wickremesinghe.

For selected and approved projects, interest-free loans will be disbursed from funds deposited in an account held by Agriculture and Plantation Industry Ministry Secretary at the Bank of Ceylon’s Head Office. Beneficiaries will have the option to process their loans through any of the three participating banks. 

The loan concession period is up to six months, with a maximum repayment period of five years, including the concession period. The specific concession and repayment terms will be determined by the agricultural modernisation centres based on the loan amount and the nature of the project.

Speaking on the initiative, Dharmakeerthi emphasised the importance of transitioning towards production-oriented programs. 

“We need to transform to production-oriented programs even now. Through this agreement, we aim to identify and support categories with production potential, providing them with the necessary facilities and transforming them into initiatives that will boost production in the future,” he said.

The Ministry Secretary acknowledged that while efforts have been made to increase production, the desired goals have not yet been fully realised. “Success is possible only if production is increased. We believe that the agricultural modernisation program will lead to significant achievements. This program is crucial for reaching our long-term goals. Therefore, as a ministry, we are fully committed to supporting this initiative,” he added.

Presidential Senior Advisor on Economic Affairs, Dr. R.H.S. Samaratunga said the Agricultural Modernisation Program was highlighted in two budgets presented by President Ranil Wickremesinghe. “The agreement signed today marks a crucial step for its advancement. One of the program’s objectives is to allocate previously unused land to local entrepreneurs, fostering the development of export-oriented agriculture and establishing a commercial agriculture sector driven by local entrepreneurs,” he added.

Presidential Advisor on the Agriculture Modernisation Project Senior Prof. Gamini Senanayake, Senior Additional Secretary to the President – Agricultural Productivity and Land Chandra Herath, Director – Agricultural Productivity and Land A.A.C. Nilantha Perera, BoC Deputy General Manager R.M.N. Jeevantha, RDB Chief Executive Officer/General Manager (Acting) E.A.D. Janitha Priyashantha and several other officials were present at the event.