June 15, 2017 (LBO) – Sri Lanka’s SME sector has been injected with 719 billion rupees by both state and private sector banks in 2016, with Commercial Bank of Ceylon leading with 273 billion rupees in such lending.
Department of Development Finance said in a report that in 2015, 604 billion rupees was granted by both state and private sector commercial and development banks to fulfill the funding needs of SMEs.
In 2016, out of the total loans granted by both state and private sector banks, nine percent was to the agriculture sector, 22 percent to the service sector, 29 percent to the industry sector, while 40 percent went to all other sectors.
Commercial Bank has contributed to the sector with 12 billion rupees worth loans for agriculture, 170 billion rupees for the services sector, 36 billion rupees for the industry sector and 55 billion rupees for others.
Bank of Ceylon has disbursed 124 billion rupees worth loans with 6 billion rupees for agriculture, 8 billion rupees for services, 3 billion rupees for industry and 113 billion rupees for others.
HNB has disbursed 113 billion rupees worth loans with 11 billion rupees for agriculture, 75 billion rupees for services, 20 billion rupees for industry and 7 billion rupees for others.
The government however encourages banks to reach out to SMEs by moving beyond traditional banking in order to enhance the availability of financial facilities for SMEs to support them to reach the next level of their industry.
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Sri Lanka recognizes SMEs as the backbone of the economy since this sector plays a major role in employment generation, contribution to GDP and ensuring equitable development in the country.
In 2016, the banking sector disbursed 130 billion rupees in loans to the microfinance sector which includes all enterprises that employ less than 10 employees and have annual turnover not exceeding 15 million rupees for manufacturing and service sectors.
Seventy five billion rupees was disbursed by the BOC while Regional Development Bank and People’s Bank disbursed 29 billion rupees and 10 billion rupees respectively in 2016.
Compared to state banks, Sampath Bank and HNB were the private banks with significant microfinance portfolios providing access to finance through various microfinance programmes.