Govt.announces loan deferment scheme for SMEs | Daily News


 

Govt.announces loan deferment scheme for SMEs

State Minister of Development Banking and Loan Schemes Shehan Semasinghe announced a loan deferment and a government-backed working capital scheme to be made available through the banking channels shortly. The scheme is to target SME borrowers with facilities under Rs.300 million.

Semasinghe was speaking at the Finance Ministry yesterday. Semasinghe said that due to the fall in economic activity, the government was pressed to implement such a scheme.

He said that the ground situation with the SME sector was critical. The President, the Government, the Central Bank and the banks have all endorsed the scheme.

Semasinghe said that banks have begun auctioning off SME assets at an unprecedented scale. He said the scheme would complement the VAT reduction scheme.

The scheme targets both performing and non-performing loans. Loans that are performing and have more than 50 percent of the principle down paid can defer and increase their facility. These borrowers can double the current repayment period of their facility and further increase their facility to Rs.300 million at 200 basis points over the Prime Lending Rate.

Non-performing loans can have 25 percent of their interest payments deferred. All interest accruing due to penal interest rates will also be waived for these borrowers. Both non-performing and performing borrowers will be eligible for a 3-month working capital loan with a three month grace period at a rate benchmarked to the reverse repurchase rate on Government Securities. Banks offering these facilities can obtain a guarantee from the Central Bank for 75 percent of the liability that they incur. Treasury Secretary S.R.Attygalle said the deferment of payment will not have any impact on the government budget as it is not a revenue expense.

Semasinghe said that SMEs are the focus of the current government.

 


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