CBA President Dr. D. Venkateshwaran, flanked by key CBA members, addressing the media in Colombo
Pic by Pradeep Dilruckshana
- Say delayed govt. response to their calls would drive banking sector into crisis
- Request one-year grace period on loans and continuous access to OD facilities
- Claim business activities have declined drastically; employees sent home on unpaid leave
- Request meeting with President and PM to apprise their plight
By Nishel Fernando
The Colombo Business Association (CBA) representing small and medium-sized enterprises (SMEs) in the country warned that the delayed decision making by the government to support the crisis-hit SME sector in the aftermath of Easter Sunday bombings would drive the banking sector into crisis, leaving many unemployed.
While noting that CBA and its affiliated organizations have a membership of 50,000 businesses across the country, CBA President Dr. D. Venkateshwaran yesterday urged the government to provide necessary financial relief for SMEs within the next couple of weeks before it’s too late.
CBA requested one-year grace period for interest and capital repayments of loans obtained by SMEs as their business and trade activities have come to a standstill.
In addition, CBA also requested the government to provide access to new working capital loans and continuous access to bank overdraft facilities.
The CBA members are involved in various sectors as suppliers, traders or service providers, and have close connections with the tourism industry. The involved sectors range from recruitments to textiles to food essential to electrical.
CBA General Secretary Chaminda Vidanagamage said businesses of their members also suffered from the political crisis that erupted at the beginning of the peak tourism season last year.
“Since we had a very good year up to March, we were planning to recover our losses from the off-peak season which was supposed to begin after April New Year holidays,” he said.
During a meeting between the Central Bank and the CBA, Central Bank Governor Dr. Indrajit Coomaraswamy had assured CBA officials to consider necessary relief.
The Central Bank is scheduled to announce a broader financial relief package to the impacted businesses on May 30 in a meeting with CEOs of commercial banks.
However, Dr. Venkateshwaran warned that in one month, most of businesses would be beyond survival and would go bankrupt sending shockwaves to the country’s banking sector and the economy.
“We will be unable pay salaries for our employees this month; we will be unable to pay loan instalments to banks and finance companies this month,” Dr. Venkateshwaran said.
Mirror Business learns that certain business organizations have sent some of their employees on unpaid leave as business activities have declined drastically following the April 21 bombings.
“The banking sector hasn’t felt the impact as we were able to continue meeting the capital and interest payment cycles. However, when we are unable pay our instalments, how are the banks going to survive,” a CBA member questioned.
As the accounts of these businesses and their owners will move into non-performing loan (NPL) category, the CBA member said the businesses would be forced to seek financing facilities from errant lenders.
CBA also warned that the delayed action from the government would lead to a substantial increase in unemployment in the country as the CBA members and members of affiliated organisations currently employ over a half a million people.
Despite requests from CBA, the organisation is yet to receive an opportunity for a meeting with the President or Prime Minister.
Dr. Venkateshwaran urged the government to look at the tourism industry in a broader view and to provide solutions swiftly.
He suggested the President to form a Presidential Task Force with industry representation to come up with implementable solutions for the industries rather than appointing ministerial committees.