NDB looking at additional credit facilities for SMEs
In April last year NDB secured one of the winning bids to receive Asian Development Bank (ADB) funds via Sri Lanka’s Finance Ministry to be disbursed as credit facilities for Small and Medium Enterprises (SME) ventures.
Following the positive distribution of the USD 12.5 million (LKR 1.81 billion) given by the ADB, NDB is now in negotiations with other funding organisations and the ADB itself to secure similar services.
NDB said that it had given out loans within four months of receiving the ADB funds, adding that its criteria had been “…ensuring speedy processing to meet the time constraints, along with qualitative aspects of the disbursement considering the significant economic impact that the funds/credit line and leave on the country’s economy.”
“Among such qualitative aspects, we prioritised on aspects such as generation of employment opportunities, assisting women entrepreneurs and reaching out to people who are currently not a part of the formal banking system of the country. Another major target of the bank’s disbursement plan was maximum geographical reach in terms of disbursement. Achieving this target, the bank succeeded in opening access to the credit line to 160 beneficiaries spread across 23 out of the 24 administrative districts in the country. The district of Kilinochchi, which was not covered in our disbursement initiatives, was due to the simple reason that the bank was not operating its network in this district,” said NDB CEO, Dimantha Seneviratne.
Seneviratne went on to say that this loan facility had a high demand and NDB was compelled to limit dispensation considering time restrictions, network reach, accessibility of borrower information, suitability of the recipient etc.
“The ADB credit line did not have a prescribed minimum value for a single customer, instead capped a single facility to a maximum of LKR 50 million. Some 160 facilities were granted with an average loan size of LKR 11 million. This is one of the qualitative aspects that the bank focused in the administration of this fund, to ensure the maximum positive economic impact left of the beneficiaries individually, and the country’s economy at large.We didn’t record indirect job opportunities created and we hope there would be indirect employment opportunities created as well. The 3,128 employment opportunities are a commendable outcome as the project ultimately would assist to uplift the living standards of the people,” he stated.
He added that NDB had approached female businesspersons and start-up enterprises that were discounted for loan facilities due to the risk factor involving start-ups.
NDB also ensured that those who applied as loan recipients complied with all environmental requirements and regulations, even extending their support for some businesses to obtain the required environmental approvals. Having granted 92 SME loans totalling LKR 1.02 billion in 2016, NDB has been ranked number one out of ten Sri Lankan Participating Financial Institutions (PFIs) under the SMILE III Revolving Fund sponsored by the Japan International Co-operation Agency (JICA) and managed by the Ministry of Industry and Commerce.
“The recent retail and SME integration at all branches, promotes aggressive cross-selling. The changes combine wider distribution/delivery of SME products with centralized processing to reap the economies of scale – which are fundamentals to building a successful and sustainable SME business proposition in the bank,” Seneviratne explained.
According to NDB annual report the bank’s “… SME lending portfolio expanded by 48% in 2016 and the portfolio stood at LKR 328.4 million covering 2,334 clients, out of which 60% accounts for females.”
“NDB also strengthened the marginalised section of the economy through non-financial services such as improving financial literacy, management and technical skills, training and market linkages, along with value additions such as technical skill developments. In Sri Lanka as in many developing and emerging economies, small and medium enterprises are the backbone of the economy and their role is vital to jump start the economy. Recognising this, the bank has from its inception responded to the needs of the SME sector by giving adequate credit,” he added.
Seneviratne said that one of NDB’s subsidiary companies, NDB Zephyr Partners Ltd was set up in 2014 to handle SMEs and concentrates heavily on the sector.
“Zephyr Partners manages the Emerald Sri Lanka Fund and is a private equity fund dedicated to investing in small and mid-sized businesses seeking expansion capital in Sri Lanka. The Emerald Sri Lanka Fund has invested in projects like Cleanline Linen Management (Pvt) Ltd., a centralised laundry services provider to star class hotels in Sri Lanka and JAT Holdings (Pvt) Ltd. (JAT), the market leader in water-based wood coatings sector in Sri Lanka,” he said.
This level of dedication to uplifting Sri Lanka’s SME sector is a good indicator to businesses that wish to start similar scale operations in Sri Lanka. Also individuals looking at commencing small businesses could try to secure the benefits of facilities offered by NDB.
|Article Code :||VBS/AT/20092017/Z_13|