NBFIs to extend credit support for SMEs to accelerate economic growth
The Government has included finance and leasing companies in the scheme to provide immediate relief to the small and medium enterprises (SMEs), which are the economy’s backbone, by way of freezing capital repayment for one year to kick-start growth via key sectors.
“Finance and leasing companies will be included in the scheme on the same basis,” the Central Bank announced.
Special credit support scheme has been introduced to eligible Small and Medium Enterprise borrowers of Non Bank Financial Institutions (NBFI) sector.
This scheme was launched with a view to accelerating economic growth in the country, the Central Bank announced.
President Gotabaya Rajapaksa has directed banks and finance companies to suspend the recovery of loans to businesses for a period of six months, as the country is battling a coronavirus epidemic.
The president has said that he would request banks to give working capital loans to businesses at 4 per cent interest while directing banks and finance companies a recovery period of six month from the loan facilities taken by businesses, as it is a huge burden on them presently.
Subsequently, considering the importance of extending the benefits of the borrowers of Non Bank Financial Institutions Sector (NBFI), it was decided to introduce a similar scheme for NBFI.
Accordingly, the Central Bank has introduced a special credit support scheme for the individuals and entities who are engaged in income generating activities, already classified as non-performing as at 31.12.2019 based on terms and conditions specified in the Circular No.01 of 2020 – Credit Support to Accelerate Economic Growth.
Therefore, all eligible borrowers shall make a written request to the respective Licensed Finance Companies (LFCs)/Specialised Leasing companies (SLCs) on or before 31.03.2020 to enjoy the benefits of the scheme.
The total penal interest accrued and unpaid after obtaining the leasing and hire purchase facilities will be waved off and 10 per cent of the accumulated and unpaid interest of the defaulted installments will also be differed under his scheme.
If the borrower has repaid 50 per cent or more of the initial capital then the balance capital outstanding, the balance portion of interest of the defaulted installments and the future interest will be rescheduled for a period of twice the maturity period of the original loan or four years whichever is lower.
If the repayment is less than 50 per cent but at least 25 per cent of the initial capital then the balance capital outstanding, the balance portion of interest of the defaulted installments and the future interest will be rescheduled for a period of twice the maturity period of the original loan or five years whichever is lower.
Credit facilities obtained from NBFIs will also be rescheduled in a similar manner, Central Bank said.