- People’s Bank receives over 4,000 applications for Rs.12bn worth of loans from SMEs
- Bank’s chairman says trying to extend single-digit interest rate loans for SMEs
By Shabiya Ali Ahlam
As businesses across the country are suffering from the economic and financial fallout from the global pandemic, which is expected to continue beyond 2020, the demand for loans by the small and medium enterprise (SME) sector is heating up, a top official of the state-owned People’s Bank said.
With tight cash flows and lack of funds to meet the operating expenses being the key challenge faced by the micro and SME businesses, in addition to the relief packages received, the sector is observed to be seeking more funds to stay afloat.
According to People’s Bank Chairman Sujeewa Rajapakse, People’s Bank has received a large number of loan applications from micro and SME entities, in the recent few weeks.
“We have got 4,389 applications seeking for a total of Rs.12 billion worth loans. We are working on it and hope by next week we will be able to get the bulk of the proceeds,” Rajapakse told a webinar organised by the Sri Lanka Chamber of Small and Medium Industries (SLCSMI).
In a bid to provide more breathing space for the micro and SME sector, Rajapakse said efforts are being taken to offer single-digit interest rate loans, as with the high rates that are in place, it is unlikely the sector would survive.
“The government is looking at single-digit interest rates and we have agreed to come out with this to support the SME space. If the interest rates continue to be in the 12-15 percent range, it is not going to work anymore,” Rajapakse said.
While acknowledging that the banking and financial sector is also challenged, as it has stretched to fulfil the directives of the government, Rajapakse stressed the need to manage liquidity and give it the highest prominence.
“We need to manage liquidity on our own; that is number one. The key is liquidity at this moment. This is why the government came out with liquidity support and liquidity control processes,” he said.
As fiscal space is limited, due to the crisis brought about by the pandemic, Rajapakse said it is important to understand that there is no more a level-playing field.