Banks asked to support flood-hit SMEs

• On PM’s instructions Minster Kabir Hashim convenes meeting of bankers along with CB Chief

• Short-term concessionary facility, moratorium on loan repayments among measures discussed

The Government yesterday requested the banking sector to immediately help small and medium enterprises and entrepreneurs in 15 districts devastated by the monsoonal floods over the weekend. 

This appeal was conveyed to the banks when Public Enterprise Development Minister and UNP General Secretary KabirHashim on the instructions of Prime Minister Ranil Wickremesinghe convened a meeting at Temple Trees along with Central Bank Governor Dr. Indrajit Coomarsawamy yesterday. 

Bank representatives who were present said several branches and ATMs were inaccessible in affected areas. The banks were told to assess the impact and provide a status report on Friday when a second meeting is to be convened. 

A flooded factory is seen in a village in Matara, Sri Lanka, 29 May, 2017. President Media/Handout via REUTERS

At yesterday’s meeting, Minister Hashim had emphasised the urgency of banks helping district-based businesses to get back on their feet. The flooding in these areas have destroyed stocks in shops and raw material and production in small factories.

In that context, how banks can extend short term credit or refinancing at concessionary rates of interest for the purpose of rebuilding affected businesses was discussed along with the possibility of faster disbursement, as well as imposing a moratorium on repayment of existing loans so as to ensure borrowers can continue their operations without the overhang of debt servicing.

Concession for classification of overdue advances to Non Performing in respect of affected customers so that either rescheduling or new borrowings through a refinance scheme could be obtained was also discussed. 

Another is providing adequate security for banks to open their branches.

Analysts said economic growth will be impacted in the aftermath of the floods that has killed nearly 200 with over 100 missing. The 15 districts including Ratnapura, Kalutara, Matara, Galle, Gampaha and Kegalle are among key contributors to the economy.