National Credit Guarantee Institution to support SMEs to be operational

Wednesday, 31 January 2024 04:02 - - {{hitsCtrl.values.hits}}

The Cabinet of Ministers cleared the initiation of operations for the National Credit Guarantee Institution (NCGI), following the proposal presented by President Ranil Wickremesinghe in his capacity as the Finance, Economic Stabilisation and National Policies Minister.

NCGI will provide partial credit guarantees (PCG) on investment loans to SMEs with inadequate or no collateral. The project will help SMEs by enhancing access to finance and strengthening their capacity to adapt their business models to external changes, including those caused by climate change. The project is designed to particularly support women entrepreneurs who are often disadvantaged, as well as promote climate adaptation and mitigation activities.

Currently, the institute has completed its registration as a public limited company and is in the process of securing an initial capital of $ 50 million from the Asian Development Bank (ADB).

On 27 April 2021 the Cabinet approved the establishment of the NCGI, aimed at offering assistance to small and medium-scale entrepreneurs. Consequently, the signing ceremony of the Shareholder Agreement (SHA) was held on 5 July 2023 at the Finance Ministry allowing the chosen 13 Participatory Financial Institutions to be the founding members of the NCGI and proceed with the share issuance. Deputy Secretary to the Treasury R.M.P. Rathnayake is the signatory for the Government’s side.