IFC improves loan access to small Lankan businesses
View(s):World Bank unit, IFC is working with Sri Lanka’s Credit Information Bureau (CRIB) to improve access to loans and other financial assistance to upto 37,000 micro and small businesses.
IFC said in a media statement that it would provide advice and assistance to CRIB to support the legal framework which will enhance financing for firms against movable assets such as inventory and equipment. Expanding the collateral registry to include nn-fixed assets, all of which are more readily available to small businesses, makes it easier for them to obtain financing even without traditional mortgages like land or property.
“IFC’s assistance in this project will pave the way for a well-developed Secured Transactions Act, and provide transparent rules for creditors,” said Ananda Silva, Chairman, CRIB, according to the statement. “It will also facilitate the use of movable assets as collateral, benefitting businesses and supporting economic growth.”
Sri Lanka’s small and medium enterprise sector represent between 80 to 90 per cent of businesses and generates 75 per cent of the employment. However, the World Bank’s 2011 Investment Climate Assessment estimates that only around 35 per cent of Sri Lankan small firms can access a loan or a line of credit, and around 14 per cent of those who applied were denied financing, the IFC statement noted.
“This initiative will make it easier for small businesses and entrepreneurs with few fixed assets to obtain the financing they need to grow,” said IFC Executive Vice President and CEO Jin-Yong Cai. “And it will allow financial institutions to reduce risks and diversify their lending portfolios.”
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