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Financial assistance for affected businesses taking too long: Trade body
View(s):The two main Government initiatives aimed at assisting businesses affected by the COVID-19 pandemic are bogged down in bank formalities and paperwork and risk being redundant, “like administering medicine to a sick man after he has died,” a leading entrepreneur association warned this week.
The Central Bank had directed financial institutions, including licensed finance companies, to provide a six-month loan moratorium to a range of persons, including small and medium enterprises in affected industries such as tourism, apparel, plantation, IT and related logistics service providers. New working capital and investment purpose loans were also launched.
But Roshana Waduge, President of the 2,500-member Sri Lanka Trade Development Council (SLTDC), said banks have asked businesses to send in their requests for the working capital loan by April 30 after which they will “evaluate and inform” of the outcome by the end of May.
“Businesses have already been running without a cash flow since mid-March,” he said. “This will be way too late. They must not insist on sticking to normal procedure during a global crisis of this nature.”
The key objective of the working capital loan was salary support and prevention of unemployment.
“When they ask for securities and collateral, how will people get documentation completed during a curfew with most offices closed?” Mr Waduge asked. “If banks don’t assist the small and medium enterprises which are the backbone of Sri Lanka’s economy, we will have an economic virus to deal with when this coronavirus ends.”
The banks have directed their internal departments to implement Government directives, explained Ranjan Senanayake, Secretary General of the Ceylon Bank Employees’ Union: “But, under present conditions, there are severe technical and logistical limitations to work through.”
“We are aware of the urgency of the financial situation,” Mr Senanayake said. “That is why we will create a system to cater to these needs faster. The union and the banks aim to give out the first tranche of working capital loans during the first week of May.”