Press Releases & Speeches
 About the Bank
 Monetary Policy
 Financial System Stability
 Currency Management
 Agency Functions
 Laws & Regulations
 Service & Career Opportunities
Agency Functions
Regional Development

Credit Guarantee Schemes
In accordance with Section 108(1) of the Monetary Law Act No.58 of 1949, the Central Bank of Sri Lanka (CBSL)  acts as the agent of the GOSL or acts on behalf of the GOSL in guaranteeing the loans granted by banking institutions, which are qualified to receive guarantees under special development programmes.  An amendment was made to Section 108 of the Monetary Law Act as 108A in 1974 to extend the guarantees to loans, advances or other accommodation granted to small-scale enterprises by credit institutions operating in Sri Lanka.  This has facilitated the operation of guarantee schemes by the CBSL in respect of loans granted to small enterprises and agricultural activities.

Provision of credit guarantee coverage to Participating Credit Institutions (PCIs) and Participating Financial Institutions(PFIs)  to cover a part of their credit risk.  RDD has been assigned with the responsibility of the implementation of such credit guarantees issued by the CBSL.  RDD on behalf of the CBSL and GOSL implements twelve (12) Credit Guarantee Schemes to provide guarantees under donor funded and GOSL sponsored credit schemes.

Source of funds :
(a) Seed funds received from CBSL / GOSL
(b) Premia collection from PCIs / PFIs

Investment income

Seed funds received under (a) above are as follows :

CBSL funded Credit Guarantee Schemes
01 Credit Guarantee Scheme under Small and Medium Scale Industries (SMI)
02 Credit Guarantee Scheme under Small and Medium Enterprise Assistance




03 Agriculture Rehabilitation Project Credit Schemes


04 Susahana Credit Guarantee Scheme (SUSAHANA)
05 Perennial Crops Development Project Credit Scheme


06 Small Holder Tea Development Credit Scheme (SHTDP)
07 Plantation Sector Reform Project (PSRP)

GOSL funded Credit Guarantee Schemes
01 New Comprehensive Rural Credit Scheme (SARUSARA)
02 Tea Development Project Credit Scheme


03 Second Perennial Crops Development Credit Scheme (SPCDP)
04 Apparel Sector Guarantee Scheme


Operation of Credit Guarantee Schemes
Implementation of a Credit Guarantee Scheme is more or less similar to implementation of any insurance scheme.  According to the terms and conditions of the Credit Guarantee Schemes, the respective PCIs are responsible for undertaking certain activities including the following.  

(a) Proper appraisal of projects for establishing their economic and financial viability.

Obtaining prior approval from CBSL / donor agencies, as required, in respect of loans beyond a


certain limit.


Taking sufficient securities in accordance with the Operating Instructions issued by the CBSL.

(d) Observing necessary care and prudence in disbursing the loans and submitting position

reports to CBSL on loans which have fallen into arrears every 6 months and taking steps to minimize any losses to PCIs, until a claim is lodged.


Once the CBSL issues a guarantee, sustaining the validity of the guarantee cover by making

  timely and continuous payment of premia and providing required documents to CBSL.

Credit Guarantee claims of PCIs in respect of loans in default will be entertained by the CBSL only after the PCIs have initiated legal action against the borrower to recover the loan.  After the settlement of the claim, any money recovered by the PCI is to be shared with the CBSL immediately upon the receipt of such amounts.

> FAQs
> Links
> Site Map
> Contact Us
> Disclaimer
Agency Functions
Foreign Exchange Management
Public Debt Management
  Government Securities
  Market Information
Regional Development
Regional Development Lending Programmes
  Credit Gurantee Schemes
  Promotion of Forward Sales
  Regional Offices
Management and Administration of the Employees' Provident Fund
© Central Bank of Sri Lanka. Allrights reserved 2010. Site by SLT Web Services