- Commends President Gotabaya Rajapaksa for decisive move
- Wants MSMEs to be funded based on business rather than collateral
Sri Lanka’s latest credit and refinancing support for private sector has been lauded by the country’s micro and SME sectors.
“Finally, the much needed relief. We can now be optimistic of an economic revival,” said Nawaz Rajabdeen Founder President of the Confederation of Micro, Small and Medium Industries (COSMI).
Rajabdeen was welcoming Central Bank’s June 15 roll out of new credit schemes at an estimated Rs.100 billion to revive the economy.
“We are now eagerly and impatiently awaiting for operating instructions from Central Bank to banking sector so that the new scheme can kick-start immediately. A quicker disbursement shall result in faster revival. “The 4 percent 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,” Rajabdeen stressed. “Most importantly we call to disburse this credit on a business basis and on business track records rather than on a collateral basis.
The bulk 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 on collateral,” he added.
COSMI wants President Rajapaksa to intervene in the same decisive manner towards other government institutions that are involved in micro and SME support.
“Not only SMEs are more than 50 percent 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. Therefore, asking for collaterals from them should not be prioritised in this revival credit scheme,”