Development Finance & Access to Finance

The Central Bank of Sri Lanka (CBSL) on behalf of the Government of Sri Lanka (GOSL), supports policies to enhance Access to Finance thereby achieving balanced growth and financial inclusiveness in the country. In order to achieve these objectives, the CBSL coordinates, facilitates and implements various refinance schemes, interest subsidy schemes and credit guarantee schemes and delivers credit supplementary services through its Regional Development Department (RDD).

The strategic objectives also include the enhancement of regional growth, reduction of poverty, creation of income generating activities and employment opportunities, provision of skills development and training, facilitation of formal financial services, strengthening economic activities in the lagging regions and enhancement of production of essential food items including organic food to ensure food security and food safety.

Services

Financial Assistance

The RDD provides affordable finance through a network of the Participating Financial Institutions (PFIs) for beneficiaries in the Agriculture, Animal Husbandry and Micro, Small and Medium scale Enterprises (MSMEs) in the country. The funds are made available at concessionary terms and conditions through PFIs to the needy people and business ventures with a view to ensuring that beneficiaries of the loan schemes are well geared to meet the challenges ahead. These schemes are funded by the Government of Sri Lanka (GOSL), the Central Bank of Sri Lanka (CBSL), Donor agencies and PFIs. PFIs are mainly the Licensed Commercial Banks and Licensed specialized Banks.

Credit Guarantee

The RDD implements credit guarantee schemes with a view to mitigating credit risk of the loans granted by the PFIs to a certain extent. Under these schemes, loans granted by the PFIs for specific sectors, are guaranteed in case of defaults. For this purpose, the Department issues Operating Instructions specifying the terms and conditions applicable under each scheme, including issuance of guarantees and indemnity payments, etc. These schemes are beneficial to the PFIs, as these schemes help lower the credit risk of loans provided by them. To be eligible under the scheme, a PFI is expected to pay the premium, specified in the Operating Instructions of the particular scheme.

Interest Subsidy

PFIs are eligible to receive interest subsidy for the loans granted by them under the relevant interest subsidy scheme. These schemes are implemented to compensate the cost of funds of PFIs while encouraging them to grant loans to the specific priority sectors of the economy.

Public Awareness

CBSL conducts a series of awareness building and skill development programmes, especially for those who are outside the formal financial system through RDD. These programmes mainly focus on financial management, entrepreneurship development, Training of Trainers (TOT) and workshops on entrepreneurs, especially to promote financial inclusiveness of the country.

Forming Self-help groups for social empowerment of low income generating personnel, who mutually agree to work as a team to alleviate poverty among them by helping each other, is also coming under the purview of the RDD. In addition, RDD enhances public awareness on access to finance and financial inclusiveness, using print and electronic media. Moreover, RDD takes necessary policy measures in line with the contemporary developments in the economy.

Loan Schemes

Currently, Regional Development Department (RDD) implements and coordinates  9 loan schemes. These schemes provide refinance facilities, credit guarantees and/or interest subsidies, and credit supplementary services for the Small and Medium scale Enterprises (SMEs), Micro financing and Agriculture and Animal Husbandry sectors.

1. Small and Medium Scale Enterprises (SMEs)

To promote high potential and promising SMEs, the Central Bank continues to provide concessionary financing to the SME sub sector through following credit schemes.

  Saubagya
  Smallholder Plantation Entrepreneurship Development Program (SPEnDP)
  Working Capital Loan Scheme for Tea Factories (WCLSTF)

2. Micro financing

To enhance family income and uplift the livelihood of low income households by providing loans to commence or improve income generating activities following  social mobilization and skills development process the Department continues to provide loans through following credit schemes.

  Poverty Alleviation Microfinance Project – Revolving Fund (PAMP RF)
  Poverty Alleviation Microfinance Project II – Revolving Fund (PAMP II RF)
  Tharuna Diriya - Youth Empowerment and Employment Project under National Agri-business Development Project (NADeP)

3. Agriculture and Animal Husbandry

To increase the production of essential food items and ensuring food security and food safety, the Department continues to deliver credit through the following main schemes.

  New Comprehensive Rural Credit Scheme  (NCRCS)
  Tea Development Project -Revolving Fund (TDP RF)
  Commercial Scale Dairy Development Loan Scheme (CSDDLS)

These credit schemes and credit supplementary services are funded by the Government of Sri Lanka, the Central Bank of Sri Lanka, donor agencies and PFIs.