The Commercial Bank of Ceylon has announced the commitment of approximately Rs 10 billion to a Bank-funded COVID-19 Support Loan Scheme to assist affected SME enterprises.
This assistance would be in addition to the working capital loans scheme implemented under a credit line provided by the Central Bank of Sri Lanka (CBSL), the Bank said.
The Bank has obtained a short term loan of US$ 50 million from a development finance institution for this purpose, and said these loans would be provided at an annually reviewed concessionary interest rate of 8% per annum.
Intended to fund the working capital requirements of businesses affected by the shutdown necessitated by the COVID-19 pandemic, these loans would be available to businesses whose annual sales turnover is below Rs 750 million, the Bank said. The scheme was designed especially to help midsized SME enterprises that missed out on the benefits of the CBSL supported ‘Saubhagya Covid-19 Renaissance Facility.’
“Applications for financial assistance continue to flow in, and we have to support as many of them as possible,” Commercial Bank Managing Director Mr S. Renganathan said. “The pressure on businesses and economies is universal, but it is at times like these that banks can display leadership and show what they are truly made of. We will continue to look at new options and avenues to help businesses survive this crisis.”
The Bank will provide loans of Rs 2 million to Rs 25 million to eligible businesses under this new scheme, and has identified several sectors for priority. Furthermore, the Bank said women-connected businesses, export-related businesses, and agriculture-related businesses have been earmarked as priority segments under the scheme.
The sectors identified under this scheme are Food & Beverage, Herbal & Medicinal Products, IT & Software Development, Spices & Processed Spices, Textile & Garments including health-based protective products, Rubber-based Products and innovative Light Engineering products.
When applying for the loan, the Equity Contribution rate of the borrower should be at least 10% of the proposed requirement. Borrowers can repay loans within 36 months, based on the cash-flow generation of their businesses.
Small and medium enterprises (SMEs) affected by the pandemic and Commercial Bank’s BIZ club members who have registered business entities will be eligible to apply for a support loan. Applications of subsidiaries and associates of any group of companies, and businesses with credit exposure exceeding Rs 250 million, including the proposed facility, will not qualify, the Bank said.
The Commercial Bank of Ceylon, one of the largest lenders to the SME sector has been offering financial support services to businesses in order to soften the blow of the economic effects that COVID-19 has imposed. In April the Bank announced a series of concessions for borrowers whose loans had already been classified as non-performing based on a Central Bank of Sri Lanka relief package for COVID-19 affected borrowing customers. It also offered several concessions for its Credit Card holders including a special card repayment plan for outstanding balances.
In May, the Bank announced a reduction of lending rates across the board for new loans, leases, pawning and overdraft facilities. It slashed the rates on Agribusiness Loans and ‘Diribala’ loans designed for SMEs and micro enterprises by 2%, while Green Loans and Leases that support conversion to renewable energy were given reductions of up to 1.5% in applicable the interest rates. Leasing, Biz Loan and Personal Loan customers benefited from reductions of 1.5%, .5% and .5% in their respective rates of interest.
The first Sri Lankan Bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for nine years consecutively, Commercial Bank is celebrating its 100th anniversary this year. The Bank, which won more than 50 international and local awards in 2019, operates a network of 268 branches and 865 ATMs in Sri Lanka.
Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Representative Office in Yangon and a Microfinance company in Nay Pyi Taw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.