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Sri Lanka SMEs praise credit rollout, call for speedier outlay

Sri Lanka’s latest credit and refinancing support for the private sector has been lauded by the country’s Micro and SME sectors.

“Finally, much needed relief. We can now be optimistic of an economic revival,” said Nawaz Rajabdeen, (Pictured.) founder President of the Confederation of Micro, Small and Medium Industries (COSMI) in Colombo.

COSMI’s Rajabdeen was referring to the Central Bank’s June 15 roll out of new credit schemes at an estimated Rs. 100 billion to revive the economy. Reports said that President Gotabaya Rajapaksa had directed the Central Bank on June 15 to revive the severely handicapped business sector disrupted by COVID-19.

“We are now eagerly and impatiently waiting for operating instructions from the Central Bank to the banking sector so that the new scheme can kick-start immediately. A quicker disbursement shall result in a faster revival. The 4% interest is a reasonable rate in comparison to retail market rates. Still, we call for extended repayment schedules, rather than a shorter deadline for repayments as MSMEs are struggling in a big way due to economic slowdown and COVID-19. “Most importantly we call to disburse this credit on a business basis and on business track records rather than on a collateral basis. The bulks of Micros and SMEs have been faced with massive losses and are unable to show significant collaterals at the moment-this is why it is important to focus on business based lending rather than collateral based.” “We call the President to intervene in the same decisive manner towards other government institutions that are involved in Micro and SME support. Not only are SMEs more than 50% of our economy, we even saw their response capacity during COVID-19 lockdowns—their ability to deliver essential items and groceries with remarkable speed in Just in Time (JiT) fashion that saved people from hunger and even sustained urban communities.