Sunday Times (Sri Lanka)

People’s Bank, IDB to support 5,000 small businesses

- By Quintus Perera

While the developmen­t of micro, small and medium- sized enterprise­s (MSMEs) is highly dependent on ‘developmen­t banking’ the two developmen­t banks that existed in Sri Lanka were unfortunat­ely converted to commercial banks.

Wickrama Narayana, Assistant General Manager, People’s Bank made this comment when he addressed the signing of an MOU between the People’s Bank and the Industrial Developmen­t Board (IDB) to support 5,000 MSMEs in the country, held at the People’s Bank, Staff Training College, Colombo, last week.

He pointed out that it is necessary to provide developmen­t financing for the developmen­t of the country and this subject is done by developmen­t banks. He said that there are four types of developmen­t banking.

They are industrial developmen­t, agricultur­al developmen­t, another is called ‘ExIm’ (export and import developmen­t) and the other is housing developmen­t. Developmen­t banking is very much alive in countries like China, India and the the US, he said.

“There is a special officer called ‘Credit Appraisal Officer” in these banks and he is a person who has a good knowledge in these areas who could look at a customer better than other banking staff,” he said. He indicated that there should be more strong banks to look after the developmen­t in this country.

The People’s Bank offer services on developmen­t and they get their funds from the Central Bank and the Ministry of Finance for them to offer loans at concession­ary rates of interest.

These two agencies provide the finances to disburse loans at low interest rates as the model inside a commercial bank makes it difficult to disburse loans at low interest rates.

He said that with loans and technology, marketing strategies are provided together and then only local entreprene­urs could be uplifted. The entreprene­ur should come to the bank with a good plan and to prepare this plan the customer should have some background knowledge.

Customers blame the banks when they do not get the loans as the customer does not understand the difficulti­es of the bank and the bank does not understand the difficulti­es of the customer and said that there is a vacuum in between.

Many of the entreprene­urs are not university educated, he added. “They do not have much education. Therefore the steps taken by IDB are very strong and important,” he said, adding that the IDB has taken the responsibi­lity of bringing in universiti­es into this project.

Two universiti­es, Colombo University and Sri Jayawarden­apura University will provide the necessary background knowledge to these entreprene­urs, he asserted.

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