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Thursday, 9 July 2020 03:10 - - {{hitsCtrl.values.hits}}
By Nisthar Cassim
People’s Bank is reinforcing financial and advisory support to a large number of COVID-hit enterprises and professionals to revive their income streams, thereby spurring much-needed economic growth.
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People’s Bank Chairman Sujeewa Rajapakse
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“We are happy to have been, by far, the first if not among the firsts to initiate relief and support to customers during the lockdown period of COVID-19 as well as post re-opening. Being bankers for the people, we will continue to step up our efforts to ensure a quicker recovery of enterprises, entrepreneurs and professionals and the economy,” People’s Bank Chairman Sujeewa Rajapakse told the Daily FT in an interview.
Aided by the Government and Central Bank support and initiatives and using internal and new funds, the People’s Bank has committed Rs. 17 billion as post-COVID support for SMEs, a further Rs. 12 billion for post-COVID dedicated schemes such as Aswenna (agriculture) with nearly 800 loans granted worth Rs. 236 million as of 5 July, Wanitha Saviya (women empowerment), the transportation industry, artists and university students. Separately, it has allocated Rs. 16 billion to help professionals.
“These commitments are for the first phase of support and the bank will increase the allocation in tandem with demand from the relevant sectors of the economy,” Rajapakse added.
This new funding is in addition to committing Rs. 6.1 billion working capital support at 4% interest rate for 4,232 customers under the Central Bank re-finance scheme phase one. So far over 70% of the commitment has been disbursed.
“In terms of the number of applications under the Saubagya COVID-19 Renaissance Facility Loan Scheme so far, People’s Bank accounts for the highest, which reaffirms our extensive and widespread engagement with enterprises and entrepreneurs in the country,” the Chairman said. People’s Bank has the widest network, with 750 branches and service centres and the most number of accounts.
Under the six-month debt moratorium initiative, credit relief worth Rs. 34 billion has been extended to over 21,000 business customers. Rajapakse said that overall over 400,000 customers have been granted debt moratorium for their personal loans. With its advanced technology, the bank was also able to quickly refund Rs. 3 billion worth of loan instalments originally recovered for March back to customers when the moratorium was made effective from that month.
Between March and May the People’s Bank has lent Rs. 9.6 billion for non-government customers, and with the strategy of stepping up lending, the figure is expected to rise sharply in the next few months. People’s Bank expects a higher commitment under the Central Bank-initiated credit guarantee scheme phase two as well.
Apart from using its own internal funds, the recent Statutory Reserve Ratio (SRR) reduction by the Central Bank freed up nearly Rs. 15 billion of zero capital for the People’s Bank. Additionally it is negotiating for at least $ 300 million long-term concessionary funding from overseas lenders. (See box story.)
Rajapakse said People’s Bank was the first to reduce and offer loans at a single-digit interest rate, and future lending will be priced favourably whilst complying with Central Bank requirements.
“Post COVID-19, the immediate need is ensuring economic activity by supporting our customers. People’s Bank has adequate financial muscle and an excellent team of mainstream bankers to do this apart from the mandate of being a State-owned financial institution,” said Rajapakse, who is by profession a Chartered Accountant.
However, he expressed the hope that borrowers will do their part, too, by responsible use of funds lent by banks fast and at very low rates of interest. He also said that owners of companies must re-invest as well by way of equity, thereby extending their contributions to a quicker economic revival.
“It is in everyone’s interest to ensure Sri Lanka bounces back fast so cash flows will improve and jobs retained. Wise use of low cost of borrowing must be channelled for revival of business because after the moratorium ends in six months, customers will also have additional debt to service,” Rajapakse pointed out.
Advisory service
To properly serve the SMEs, the People’s Bank has created a larger dedicated team to reach out to such enterprises. For this, deployment of field officers will be reintroduced.
“We are also keen to position the bank as a partner and advisor to micro, small and medium entrepreneurs and farmers throughout the funding and business process instead of engagement only during loan application or when recovering. Such entrepreneurial support will minimise default,” Rajapakse explained.
The bank is also stepping up its advisory service by harnessing the in-house expertise. For example the bank has 87 agriculture degree holders as bankers who are being tapped to ensure successful support in the Aswenna agricultural loan scheme.
In a major initiative, People’s Bank is teaming with the Industrial Development Board (IDB) today to empower 5,000 micro, small and medium enterprises (MSMEs) with technical and managerial support together with proper financial facilities to ensure sustainability of their businesses. For this, too, the bank will harness internal insights from the staff in addition to expertise from the IDB.
Rajapakse recalled that following banking being declared as an essential service, People’s Bank ensured customer needs were met without interruptions.
“We kept over 70% of the branches open during the peak of the COVID-19 outbreak whilst following health safety practices. All our digital channels and platforms were available 24x7 as well during this period,” Rajapakse said.
According to him, the value of total transactions processed by People’s Bank ATMs and Customer Deposit Machines exceeded Rs. 190 billion by end June. The People’s Bank Mobile Service, covering 400 rural cities, processed financial transactions worth Rs. 200 million. The total number of digital transactions processed daily was about 25,000.
Total salaries paid continuously, including Samurdhi payments, by the People’s Bank branch network, covering the weekends as well, was Rs. 130 billion.
