Pawning gains popularity among SME's

Small and medium scale enterprises in Sri Lanka have shown keen interest in using pawning as a preferred source of raising funds and it is gaining much popularity among people specially in the areas of fisheries and agriculture sectors, Bartleet Religare Securities said in its latest equity research report.

According to the report, the growth of the local pawning sector has largely been attributed to the quick approval process and the ability to obtain loans irrespective of the credit history, ease of availability, recent hike in gold prices and the higher reduction rates charged by the industry. People's Bank which is known to be the market leader in the formal pawning industry and pawning advances recorded significant growth in the pawning advances category for 2010. Accordingly, the bank's total pawning advances rose to Rs. 133.2 billion, an increase of 35.9% as against the previous year .Pawning advances represented 36% of the total advances of People's Bank by the end of the financial year 2010.

Sampath Bank and Hatton National Bank had a market share of 21% and 15% in pawning advances category respectively by the end of 2010.

In 2010, pawning advances of Sampath Bank has increased by 21% to Rs 27 billion over the previous year and Hatton National Bank posted Rs 27 billion in this category indicating a growth of 15% percent during the same period compared to year 2009.