Sri Lanka think tank highlights the need of credit rating for SME’s

Oct 13, 2014 (LBO) – Sri Lanka needs a credit rating system especially for the small and medium businesses to have easy access to finance, said Saman Kelegama, director of the Institute of Policy Studies, a think tank. Access to finance remains a key constraint for SME’s growth, with a one trillion dollar credit gap remaining globally, statistics showed.

Most of the lenders reject the proposals of SME’s due to lack of account information which lead to make a make a successful business case.

It is needed to have a credit rating system for SME’s, Saman Kelegama, director of the Institute of Policy Studies said.

That is very important for banks, to grant loans for this sector.

He was speaking at the national forum on small and medium enterprise empowerment 2014, held today (13, Oct) at Colombo.

Credit rating systems help to overcome the issue of banks being reluctant to lend to SMEs with inadequate collateral and unproven record.

A rating agency will help to provide an insight into sales of a business, operational and financial composition, thereby assessing the risk element, and highlights the overall health of the enterprise.

It is estimated 75 percent of all ent