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BOC DGM Retail Banking Range ll B.K. Gurusinghe
Bank of Ceylon (BOC) yesterday said it was boosting the national economy via revival of businesses with industry-specific development loans and SME-focused specialist expertise. Here, BOC’s DGM Retail Banking Range ll B.K. Gurusinghe discusses BOC’s unique position as a leading facilitator of development loans and a key contributor to national GDP therein, plus the bank’s shift in focus from loan recovery to business revival:
BOC’s industry-wide standing as ‘Bankers to the Nation’ renders further importance to development loans as vital credit facilities contributing to national economic development. An integral part of BOC’s banking product mix, development loans allow the bank to continuously impact national GDP through targeting of critical sectors while boosting imports and reducing the import-export deficit.
The bank’s national development efforts are reinforced by the strong alignment of the associated strategies with the development aims of the Government, with export, tourism, SMEs, youth and women identified as priority sector lending areas, allowing the bank keener focus in disbursing development loans accurately.
While adhering to Government-stipulated regulations in granting such loans, BOC offers the lowest interest rate and maximum repayment period based on income generated, allowing customers an extended grace period.
Of equal importance in the disbursement of such loans is BOC’s acceptance of relaxed security or collateral, oftentimes based on the project value itself. This allows BOC customers added confidence to overcome the lack of security or collateral and initiate their entrepreneurial projects. A parallel strength of the bank involves the ability to accurately forecast income from projects, as development loans are entirely based on forecasted income, allowing customers to experience steady and consistent growth over time while individually supporting the national economy.
It is understood that development loans account for a massive 52% of national GDP, and the SME sector comprises over 90% of total entrepreneurs in the non-agriculture sector, in parallel generating 45% of employment country-wide. These numbers singly justify BOC’s keen and continuous emphasis on development lending.
As a bank with a network of 600-plus branches islandwide, BOC displays a massive sense of responsibility in actively leading the country’s development-focused activities while drawing on its physical infrastructure plus specialist expertise in loan schemes across areas such as SMEs, animal husbandry, agriculture, and fisheries. This strengthens the bank’s offering of highly specialised loans for specific tasks including building tanks, acquiring nets, and so on.
BOC’s strength in the area of development credit can be attributed to the numerous circulars fine-tuned over many years plus the tailor-made staff training programs that have allowed for the development of industry-specific loan expertise in areas ranging from fisheries along the coastal belt to paddy-focused loans in areas such as Anuradhapura.
BOC’s primary objective through the provision of development loans continues to be the gradual breaking of the poverty cycle that affects many across the country. Through the bank’s services and assistance across this sector, production is boosted, consequently improving national GDP. Improved production levels within the country directly correlate to greater per capita income and subsequent breaking of the cycle of poverty.
This bears close resemblance to BOC’s ongoing efforts in the face of the COVID-19 pandemic, with a primary focus on offering loans to customers to keep their businesses afloat and continue operations, in parallel providing highly specific loan concessions as part of the loan moratorium extended to BOC customers.
These include the ‘Moratorium for COVID-19 affected businesses’ loan with an ROI of 7% p.a; a special moratorium for businesses affected by the second wave of the pandemic in October 2020; plus the ‘Saubagya COVID-19 Renaissance Facility’ providing an ROI of 4% p.a. for repayment in 24 months along with a grace period of six months.
BOC’s strength as a key national facilitator of loans extends to other areas of lending equally, with personal loans totalling Rs. 414.05 billion with 351,374 loans disbursed; SME loans equalling Rs. 128.8 billion with 685,506 loans granted; leasing amounting to Rs. 30.69 billion with 29,630 leases; housing totalling Rs. 73 billion with 101,722 housing loans given; and pawning equalling Rs. 72.14 billion, with 19,891 loans disbursed.
The conducting of awareness campaigns on critical aspects of loan products complements BOC’s multidimensional loan facilities. Hampered in 2020 and resumed this year, the bank has paid attention across these programs to specialist areas including fisheries sector entrepreneurs, prawn culture societies, and pea sector entrepreneurs. Conducted under the BOC Divi Udana program, these programs targeting the SME sector while in parallel offering development loans have been taken islandwide.
BOC’s approach to loans stands in contrast to that of its competitors, clearly discerned in the specialised clinics hosted across the island, with a shift in focus from loan recovery to business revival. The clinics offer customers from low-income groups an opportunity to negotiate and learn from AGMs and DGMs appointed specifically for one-on-one business consulting, allowing for identification of reasons for business failure and subsequent business rehabilitation.
As part of this effort, BOC analyses if the customer is still in business, whether they are experiencing growing concerns, and if the business is viable and lucrative, before carrying out funding while appointing a staff member to closely monitor how the additional funds are utilised and how their businesses are operated.
A point stressed on constantly to BOC customers, especially those who are keen to enter the SME industry, is that BOC is committed to supporting all entrepreneurial efforts. What is of primary importance is not the size of the operation, but the planting of an idea and its continuous growth through research across areas ranging from understanding competitors fully, and comprehending their strategies, to identifying pricing methods.
Importance should be afforded in early entrepreneurship to structuring the project and commencing operations at a small scale to have a foundation when approaching the bank. BOC consistently maintains, banking support is secondary and the idea comes first. Equally, the bank stresses on the need for SME entrepreneurs to inculcate financial discipline and grow capital. Further, during the initial stage, it is important to be involved full-time and devote 100% of one’s attention to the project.
BOC stands ready to extend its fullest support to entrepreneurs who approach the bank with the right business components for entrepreneurial success. On the part of potential entrepreneurs, necessary elements include a dynamic idea, a firm vision for the business, plus strong belief in the concept. BOC will continue to support individual and business ambitions and strengthen the national economy, while leveraging its unmatched experience and specialist expertise in the areas of SME and development loans.
