All licensed banks have agreed to provide a special Credit Support Scheme to eligible Small and Medium Enterprise (SME) borrowers by way of suspending capital repayment for one year in accordance with the guidelines issued by the Central Bank.
The aim is to complementing the fiscal incentives already announced by the Government for SMEs as an immediate relief to accelerate economic growth in major sectors, CB said.
Licensed banks will defer auctioning of assets until 31.12.2020 and suspend legal action against non-performing borrowers who are participants of this Scheme.
These banks are expected to have a mechanism not to decline loan applications solely based on an adverse record at the Credit Information Bureau of Sri Lanka (CRIB).
SMEs with an annual turnover between Rs. 16 million to Rs. 750 million for the year ended 31.12.2019 that have obtained credit facilities from licensed banks are eligible to participate in this Scheme.
In the case of SMEs, which are in the Non-performing Loans (NPLs) category as at 31.12.2019, the lower limit of annual turnover of Rs. 16 million will not apply under this scheme.
SMEs operating in manufacturing, services, agriculture (including processing) and construction sectors and have obtained business related term loans, leasing facilities, overdrafts and trade finance facilities denominated in Rupees are eligible under this Scheme, subject to certain requirements.
Participants of this Scheme shall continue to service the interest due on credit facilities considered under this Scheme in a timely manner. Those who fail to service interest will not be entitled to enjoy the benefits of this Scheme, CB circular stipulated.
Eligible borrowers with aggregate outstanding exposure up to Rs. 300 million as at 31.12.2019 with a licensed bank will be avail of a capital moratorium during 01.01.2020 to 31.12.2020, from such licensed bank.
Licensed banks may consider granting concessions to borrowers whose total borrowings exceed Rs. 300 million, on a case-by-case basis.
(LI)