Sri Lanka’s banking sector and the taxation system are in the spotlight yet again following the covid-19 near normalcy situation.
Questions have been raised as to whether the Central Bank ,the banking system and the state taxation authority the Inland Revenue Department have ,been providing sufficient facilitation to contain the health crisis (that has been contained successfully at the moment) which led to an economic crisis.
The Government announced a series of economic relief packages since the beginning of the Covid-19 pandemic, including a Rs. 5,000 allowance for the most vulnerable sections of society and for the rescheduling of leases and loan facilities.
Currently, the discussion is not on what the relief measures are, but rather on how we can execute them in the right way or whether we have better alternatives.
The process of getting a working capital loan for a business including printing industry is as follows:
The businesses can apply for working capital loans from their respective Licensed Commercial Bank LCBs and upon their approval, they send the application to the CBSL and the CBSL provides the money from the credit line they established, which is Rs. 150 billion.
Banks have made available loan schemes at a 4% concessionary rate, but some borrows businessmen were used to obtain loans to settle previous loans which have been taken at a higher interest rate.
Although the CBSL and other banks have provided adequate loans under the newly established credit facility for Covid-19, many businessmen who have a solid working relationship with banks and bank managers have received these loans refinance their previous facilities..
Any MSME with better know how on financial inclusion, had been given an opportunity by the government to access for finance and tax relief granted by the government during the Covid 19 crisis period and it is still on.
Providing a relief to borrowers, the average prime lending rate of commercial banks, that is, the rate applicable to the best customers of a commercial bank, fell from 9.7% to 7.4%.
(LIN)