New legislation to protect microfinance borrowers
The government is planning to enact new legislation to protect microfinance borrowers from loan sharks where unethical lending practices by some individuals have created problems in some parts of the country.
To salvage women entrepreneurs from such problems the government has written off debts of 45,000 microfinance female borrowers amounting to Rs. 1.25 billion in the North and the East, said the Minister of Finance and Mass Media Mangala Samaraweera at the inauguration ceremony of the Asia Pacific Rural and Agricultural Credit Association (APRACA) Regional Policy Forum with the 70th Executive Committee Meeting and the 21st General Assembly held at the Hilton Colombo last Monday.
The Minister said the government has initiated the Enterprise Sri Lanka scheme to address some of the obstacles to minimise difficulties caused to the SME sector and encourage 100 entrepreneurs with start-ups within the next 12 months.
Under a new scheme graduates will be provided with interest free loans amounting to Rs.1.5 million and will encourage project-based lending than colateral lending.
He said to encourage women entrepreneurs the state has offered them with subsidy on loans under which differently abled persons too will be able to obtain loans under the Enterprise Sri Lanka scheme.
“Entrepreneurs face difficulties in setting up and running their SME businesses where the situation in Sri Lanka and in the rest of the region was the same according to surveys done around the world.” Under Enterprise Sri Lanka around 20,000 persons have applied for loans during the past four months and this will create one million jobs.
The Minister said globally SME’s represent a significant component of all enterprises and in Sri Lanka the majority of companies are in the SME category that contributes to the bulk of employment.
Countries in the world have identified the importance of SME’s in their economies as a practical instrument in achieving sustainable economic growth but persistently face difficulties when setting up businesses. He said the Sri Lankan government’s intention is to introduce SME’s into the formal sector and to establish a hard and soft infrastructure frame work to facilitate their growth. Measures are being taken to improve access to credit and markets and to encourage value chains that connect SME’s with large firms.
Meanwhile this year’s APRACA member banks from the Asia –Pacific region have gathered in Colombo to evaluate issues relating to “Financing Micro, Small and Medium Enterprise. APRACA is a non –governmental organisation involving central banks, Agricultural and Development Banks, commercial banks, apex organisations, and Federation of Financial Institutions and Rural Development Institutions in the region involved directly in Agricultural Credit and Rural Development. The State Minister of Primary Industries, Daya Gamage, the Chairman of the Bank of Ceylon Ronald Perera, CEO /General Manager Bank of Ceylon Senerath Bandara and other dignitaries also spoke.