Govt to streamline microfinance scheme - State Minister Shehan Semasinghe | Sunday Observer
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Govt to streamline microfinance scheme - State Minister Shehan Semasinghe

27 December, 2020

State Minister of Samurdhi, Household Economy, Micro Finance, Self-Employment and Business Development, Shehan Semasinghe said the Government will streamline the entire microfinance scheme and introduce a new system giving financial literacy to the main areas affected, especially, the North, East, North Central and Uva provinces trapped in microfinance debt. He said the Government will launch an awareness campaign on financial literacy next month.

The Government through the Samurdhi Banks and other Government institutions will provide micro financing at a much lower interest rate than the current rates, the State Minister told the Sunday Observer.

He said the Government does not wish to deprive the private sector companies of their opportunities in the market, but that they should fall in line with the Government’s policy. “We will have a low-interest scheme with the financial literacy program which we are trying to coordinate,” he said.

He said micro financing might have a higher cost of finance because of the risk in lending without any collateral, but exorbitant interest rates cannot be charged.

Semasinghe said steps have been taken to amend the Microfinance Act No:6 of 2016, which has been designed purely to protect western interests and not the locals. Only four companies have been registered under this Act, while all the other companies in operation are not registered under this Act, he said. Therefore, we will amend this Act and we have recalled the amendments presented to the AG’s Department to have a thorough look at them, he said.

“I have instructed private sector micro financing organisations to present their suggestions so that we can consider their interests and that of the people. We will ensure that the interest of the borrower and the lender will be protected,” he added.

Asked whether the Government has introduced any new changes to the self-employment schemes, State Minister Semasinghe said several schemes will be introducednext month. The Samurdhi Bank system which had a maximum ceiling of Rs.200,000 for borrowings, has been increased to Rs.1.5 million and we are exploring the possibility of going up to Rs.2 million, he said.

He said, “We plan to financially support small scale entrepreneurs and the people through the Samurdhi Bank system. Prime Minister Mahinda Rajapaksa had proposed to set up a Development Bank in the Budget 2021 proposals. These changes will promote a business-friendly environment in Sri Lanka. Anybody can now obtain loans below a 10 percentinterest rate including housing loans.”