MSME financing to ease with launch of National Credit Guarantee Institution

Sri Lanka will launch today the National Credit Guarantee Institution, a government-backed agency designed to expand lending to micro, small and medium-sized enterprises (MSMEs) by providing credit guarantees to banks and financial institutions.

The agency comes under the purview of the Ministry of Finance, Planning and Economic Development. It will evaluate projects based on cash flow viability rather than property collateral. This is a shift aimed at removing a key barrier for small businesses seeking loans.

“This is the first time that the Sri Lankan government and financial institutions have jointly implemented such a system at the national level for the advancement of micro, small and medium-sized enterprises,” the ministry said. 

By de-risking MSME lending for participating banks and finance companies, the agency is expected to unlock new credit lines for the sector, which plays a critical role in employment generation and economic resilience.