Banks hand over reports on loans to Govt.

• State Minister Semasinghe says PM received bank reports last week
• Opines comprehensive study needed to tackle indebtedness
• But promises equitable solutions, still considering measures to write off farmers’ loans
  
   

By Nuwan Senarathna 

Reports from private and public banks on microfinance and loans taken by the Small and Medium Enterprises (SMEs) have been handed over to the Government as the process to give relief moves a step forward. 

The Government called for reports from all public and private banks last week to evaluate microfinance and SME loans so measures to tackle indebtedness could be rolled out. 

Development Banks and Loan Schemes State Minister Shehan Semasinghe told the Daily FT the bank reports were being studied by Prime Minister Mahinda Rajapaksa and Finance Ministry officials. He noted once the studies were completed the Government would take appropriate actions to tackle indebtedness.

“We are studying the situation at the moment. Once we get a clear idea we can take necessary measures to provide relief to small and medium enterprises to encourage them to continue their economic activities,” Semasinghe said. 

He opined that the Government would not rush to write-off microfinance debt as that might lead to negative impact for the overall performance of the financial system. He stressed that the Government would not take any decision that would be beneficial only for one stakeholder. 

“Whatever the steps we take will be beneficial for everyone. We will not take any decision that will adversely affect the country’s economic development, therefore we will assess the situation in detail.”

Referring to writing-off farmers’ loans, Semasinghe noted the Government was studying the situation. He noted the Government was yet to take a final decision on writing off farmers’ loans as studies had not been completed.  “I cannot give a timeframe on when the Government will write off farmer loans. However, we will deliver our promises as soon as possible,” he said. 

President Gotabaya Rajapaksa pledged to write off farmers’ loans during his presidential campaign as a move to promote agriculture and increase farmer income. He also promised to address challenges facing small and medium businesses due to microfinance debt.  

The previous administration had also outlined policies to absorb unpaid microfinance debt incurred by 45,139 women in the North, East and North Central Provinces last year. Former Finance Minister Mangala Samaraweera in 2018 allocated Rs. 1.25 billion to write off loans give to women in 12 drought-affected districts.

Development Banks and Loan Schemes State Minister Shehan Semasinghe assuming duties earlier this month assured the Government would announce its plans soon to tackle indebtedness. He stressed the Government would stick to President Gotabaya Rajapaksa’s election manifesto to give relief to people struggling with microfinance debt and other loans.