Lankapage Logo CP 20 YEARS
Go Home Home Serving the Sri Lankan community globally since 2000
go to LankaPage.com

Leading News from Sri Lanka::

* Sri Lanka licensed banks to provide special credit support for eligible SME borrowers
Mon, Feb 10, 2020, 12:32 pm SL Time, ColomboPage News Desk, Sri Lanka.

Feb 10, Colombo: Licensed commercial banks and licensed specialized banks have agreed to provide a special Credit Support Scheme to eligible Small and Medium Enterprise borrowers of respective licensed banks, with a view to complementing the fiscal incentives already announced by the Government of Sri Lanka (GoSL), the Central Bank said.

Accordingly, the Central Bank of Sri Lanka (CBSL) has issued a Circular providing guidelines for implementing the Scheme in a consistent manner across all licensed banks.

The Scheme is in operation from 1 January 2020 to 31 December 2020.

The Circular issued to banks can be accessed from the links below and the salient features of the Scheme are as follows:

General Terms and Conditions

    • The Scheme is in operation from 01.01.2020 to 31.12.2020.
    • Eligible Borrowers
      • Small and Medium Enterprises (SMEs) with an annual turnover between Rs. 16 mn to Rs. 750 mn for the year ended 31.12.2019 that have obtained credit facilities from licensed banks are eligible to participate in this Scheme. In the case of SMEs, which are in the Non-performing Loans (NPLs) category as at 31.12.2019, the lower limit of annual turnover, i.e., Rs. 16 mn, will not apply.
      • SMEs operating in manufacturing, services, agriculture (including processing) and construction sectors and have obtained business related term loans, leasing facilities, overdrafts and trade finance facilities denominated in Rupees are eligible under this Scheme, subject to certain requirements. In the case of SMEs which are in the NPL category as at 31.12.2019, the business sectors supported under this scheme shall also include value addition businesses and trading.

    • Eligible borrowers are required to make a written request to respective licensed banks to avail of this Scheme on or before 10.02.2020.
    • Participants of this Scheme shall continue to service the interest due on credit facilities considered under this Scheme in a timely manner. Those who fail to service interest will not be entitled to enjoy the benefits of this Scheme.

Performing Loans

    • Eligible borrowers with aggregate outstanding exposure up to Rs. 300 mn as at 31.12.2019 with a licensed bank shall avail of a capital moratorium during 01.01.2020 to 31.12.2020, from such licensed bank.
    • Permanent overdraft facilities falling due or maturing or under review during the period up to 31.03.2020 will be extended up to 30.06.2020, by the licensed bank. In the case of Temporary Overdraft facilities as at 31.12.2019, the expiry of Temporary Overdraft limits will be extended by two months.
    • Eligible trade finance facilities falling due or maturing or under review during the period up to 31.03.2020, shall be extended by 30 days.
    • An additional loan or a new loan facility not exceeding Rs. 300 mn may be provided by a licensed bank, for investment or working capital purposes, with a maximum grace period of one year, subject to certain conditions. However, the borrower needs to submit a credible business plan.
    • The investment purpose loan facility should be repaid over five years at an interest rate equal to maximum of Average Weighted Prime Lending Rate (AWPR) plus 1.5% to expand business activities. The working capital purpose loan facility should be repaid over two years at an interest rate equal to AWPR.
    • Concessions already granted under different relief schemes and which are due to expire before 31.12.2020, will be extended up to 31.12.2020. However, such borrowers shall be required to comply with the requirements of this Scheme.
    • Licensed banks may consider granting concessions to borrowers whose total borrowings exceed Rs. 300 mn, on a case-by-case basis.

Non-Performing Loans (NPLs)

    • Eligible SMEs which were in the NPL category as at 31.12.2019, will be eligible to avail of the concessions set out below.
    • The total penal interest accrued and unpaid on NPL loans and advances will be waived by licensed banks.
    • Rescheduling of loans and advances will be as follows:
      • Where the borrower has repaid 50% or more of the initial capital, 50% of the accumulated and unpaid interest of the defaulted instalments up to the date of consideration by the licensed bank will be deferred and the balance capital and interest will be rescheduled. The balance capital outstanding, balance portion of interest of the defaulted instalments and the future interest will be rescheduled.

      • Where the borrower has repaid less than 50% of the initial capital, 25% of the accumulated and unpaid interest of the defaulted instalments up to the date of consideration by the licensed bank will be deferred. The balance capital outstanding, balance portion of interest of the defaulted instalments and the future interest will be rescheduled.

      • The rescheduled balances of the capital and interest need to be repaid over a period not exceeding twice the remaining number of instalments of the original loan.

      • A one-year grace period will be granted. However, borrowers will be required to service the interest in a timely manner.

    • New working capital loan: Licensed banks may grant maximum of three months working capital requirement as a loan with a maximum tenure of six months to SMEs which are in NPL category to revive businesses, at an interest rate of not more than 2% plus the prevailing Standing Lending Facility Rate, subject to conditions.
    • Licensed banks will defer auctioning of assets until 31.12.2020 and suspend legal action against non-performing borrowers who are participants of this Scheme.
    • Licensed banks are expected to have a mechanism not to decline loan applications solely based on an adverse record at the Credit Information Bureau of Sri Lanka (CRIB).
    • Credit Guarantee Scheme: GoSL and CBSL will formulate a Credit Guarantee Scheme to mitigate the credit risk arising from any additional loans and advances for up to 75% of the capital sum granted by licensed banks.

 

ColomboPage - Recent 10 Stories ::
President opens Southern Expressway extension linking Colombo to Hambantota-Mattala for public
-- [1 hour and 2 minutes ago]
Sri Lanka sets up Task Force to expedite probe into Easter Sunday terrorist attacks
-- [1 hour and 35 minutes ago]
Use water and electricity sparingly, government requests as dry weather continues
-- [9 hours ago]
Maximum retail price for imported big onions from today
Police arrest six packing heroin in Piliyandala
Sri Lanka tea production, exports decline in January 2020
Sri Lanka apprises UNHRC of decision to withdraw from resolutions
Sri Lanka Defense Secretary emphasizes the need of a disciplined and professional Police force
Tolls for new extension of Southern Expressway gazetted
Home Minister says LTTE remains a terror group in Malaysia

Copyright © 2000, 2020 by LankaPage.com (LLC) :
The news and other contents on ColomboPage are copyrighted property of LankaPage.com, LLC. Any unauthorized use of any information on ColomboPage may constitute a violation of copyright laws. You need written permission to reproduce, republish, post, transmit, broadcast or distribute, material from this site from LankaPage.com, LLC. However, news organizations or broadcasters in Sri Lanka may republish the news items in ColomboPage with proper acknowledgment to ColomboPage.