While the development of micro, small and medium-sized enterprises (MSMEs) is highly dependent on ‘development banking’ the two development banks that existed in Sri Lanka were unfortunately converted to commercial banks. Wickrama Narayana, Assistant General Manager, People’s Bank made this comment when he addressed the signing of an MOU between the People’s Bank and the [...]

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People’s Bank, IDB to support 5,000 small businesses

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While the development of micro, small and medium-sized enterprises (MSMEs) is highly dependent on ‘development banking’ the two development banks that existed in Sri Lanka were unfortunately converted to commercial banks.

Wickrama Narayana, Assistant General Manager, People’s Bank made this comment when he addressed the signing of an MOU between the People’s Bank and the Industrial Development Board (IDB) to support 5,000 MSMEs in the country, held at the People’s Bank, Staff Training College, Colombo, last week.

He pointed out that it is necessary to provide development financing for the development of the country and this subject is done by development banks. He said that there are four types of development banking.

They are industrial development, agricultural development, another is called ‘ExIm’ (export and import development) and the other is housing development. Development banking is very much alive in countries like China, India and the the US, he said.

“There is a special officer called ‘Credit Appraisal Officer” in these banks and he is a person who has a good knowledge in these areas who could look at a customer better than other banking staff,” he said. He indicated that there should be more strong banks to look after the development in this country.

The People’s Bank offer services on development and they get their funds from the Central Bank and the Ministry of Finance for them to offer loans at concessionary rates of interest.

These two agencies provide the finances to disburse loans at low interest rates as the model inside a commercial bank makes it difficult to disburse loans at low interest rates.

He said that with loans and technology, marketing strategies are provided together and then only local entrepreneurs could be uplifted. The entrepreneur should come to the bank with a good plan and to prepare this plan the customer should have some background knowledge.

Customers blame the banks when they do not get the loans as the customer does not understand the difficulties of the bank and the bank does not understand the difficulties of the customer and said that there is a vacuum in between.

Many of the entrepreneurs are not university educated, he added. “They do not have much education. Therefore the steps taken by IDB are very strong and important,” he said, adding that the IDB has taken the responsibility of bringing in universities into this project.

Two universities, Colombo University and Sri Jayawardenapura University will provide the necessary background knowledge to these entrepreneurs, he asserted.

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