Monday Dec 16, 2024
Monday Dec 16, 2024
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The Development Banking concept is primarily devoted to serving the public interest as well as working in the general interest of the nation. With the objective of promoting economic development by supporting entrepreneurial activity and investment, Development Banking plays an integral role in any developing economy.
The oldest example of Development Banking dates back to Belgium in the 1800s, though it was the French who, in 1852, with the establishment of industrial financier Credit Mobiliser provided the most notable blueprint for how Development Banking should be conducted.
Financial assistance, whether it is in the form of loans, underwriting, investment and guarantee operations and promotional activities, all fall within the scope of Development Banking. As Deputy General Manager of Corporate Banking at Sampath Bank, under whose purview the bank’s Development Banking Unit functions, Ayodhya Iddawela Perera says: “Development Banking is not just lending, it goes far beyond that. It is a social and economic responsibility and one in which we see ourselves not just as financers of a project but partners in the enterprise with a vested interest in its success.”
Having focused on Development Banking from its inception, Sampath Bank formed a dedicated unit for this purpose back in 1987. After three decades in the business, the bank’s Development Banking Unit has been responsible for supporting companies which are today some of the largest corporates in Sri Lanka.
Development Banking at Sampath Bank falls into two main areas - Project Financing and Micro, Small and Medium Enterprise (MSME) Financing.
The former has been an area of particular significance for Sampath Bank. Project Financing involves Medium, Large and Extra Large propositions, and the bank has specialised mainly in the power and renewable energy sectors, supporting over 70 renewable energy projects, including two large-scale solar projects.
“We are very strong in the renewable energy and power sectors,” notes Perera. “We have a highly trained and experienced team working in these areas, and are proud to say that Sampath Bank has been able to contribute over 170 megawatts to the national grid via support extended to these projects.”
Sampath Bank’s success in financing projects in this sector is supported by refinancing obtained from a variety of offshore sources which includes Development Financial Institutions (DFIs) focused on renewable energy. The bank passes on any benefits it receives through such refinancing arrangements to clients and this has further strengthened the bond the bank has with them.
Over the years, Sampath Bank has also done some exceptional work in supporting SMEs. “Here too it is relationships that matter,” says Perera. “We are always with our clients. Thanks to our extensive branch network, clients can access us no matter where they are based. The team is truly passionate about supporting our clients’ entrepreneurial visions. Some clients have a good, solid business idea, but they might not be too familiar with some aspects of running a business like maintaining accounts, legal requirements and procedures, etc. Our team steps in to advise them and support them in all those aspects as well. The bank’s network of branches throughout the island is also a major advantage particularly when it comes to the SME financing aspect of the business.”
As far as micro financing is concerned, the bank gets involved indirectly by financing the segment’s ‘direct financiers’ i.e. Non-Banking Financial Institutions.
“We understand the importance of assisting small-scale businesses, starting from cottage industries to small business units and we support them by assisting the direct financiers to this sector. They have already invested in the required infrastructure and have a widespread presence, especially in rural and deep rural areas,” stated Perera.
The strength of the Development Banking team at Sampath Bank lies in three key areas – a highly-skilled team, the strength of the relationships formed with clients and the bank’s wide reach via its extensive branch network.
“Our key strength is our project finance team. The sector head has been with us for over 20 years and oversees a highly experienced team which can assist clients in all aspects, from financial advice to technical and legal counselling.”
Working hand-in-hand with clients to ensure that every aspect of the business is covered, the team is able to use its wealth of experience to identify potential bottlenecks and also help clients resolve any issues. They are especially diligent about ensuring that all environmental and social regulatory requirements are complied with. Offering an example, Perera says: “We have specialised knowledge where hydro projects are concerned, and have established good relationships with all relevant authorities as well. This allows us to work with all parties and ensure complete compliance as well as the smooth flow of project activities.”
This kind of dedication reaps its own rewards. “Thanks to the quality of the relationships we have built with our clients, we receive many referrals and a lot of the clients we have today are ones that have come to us via recommendations from those we supported in the past.”
“The Sri Lankan economy is heavily dependent on export trade and thereby the success of local exporters,” explains Perera. “We saw that a section of our exporters were often unaware of regulations and were forced to depend on middle men, even to their detriment at times. So our goal now is to enable everyone who wishes to engage in exports to become a full-fledged exporter.”
This was the inspiration behind Sampath Bank’s Export House, a dedicated unit that helps exporters to address any issues they may face during their export transactions. The unit also provides advice on sustainable business growth, special concessions and benefits. Trade financing is another aspect designed to aid Sri Lankan exporters and help them access global markets, thereby boosting the country’s trade. With trade hubs established in Colombo, Kandy and Matara, Sampath Bank has been able to extend its advisory services regionally as well.
Sampath Saviya is the bank’s specialised entrepreneurship development program offering financial and non-financial services to local MSMEs. Encouraging and enabling entrepreneurship in this sector is about much more than the individual involved. It helps build and strengthen communities by creating employment opportunities thereby enabling sustainable development around the country. “We are now delighted to say that we have trained over 300 entrepreneurs under the Sampath Saviya initiative. After the war, the program has been working actively on empowering war widows in the north and the east,” adds Perera.
Sampath Bank has applied the full thrust of its Project Finance division behind renewable energy projects, making Renewable Energy Finance a key focus area for the bank from 2017 onwards.
In line with this strategic focus, Sampath Bank is taking the helm as the ‘Lead Syndicate Bank’ to finance an upcoming mega Waste-to-Energy project in the Western Province.
An emerging segment in the renewable energy sector, such projects offer both economic as well as ecological benefits as they help go beyond generating power and serve as a solution to the country’s garbage disposal woes too.
“The bank is proud to take the lead in promoting such projects of national importance,” asserts Perera.
In terms of SME finance, trade finance will continue to grow and develop, with a special emphasis on supporting exports since this is a vital area for the country as a whole.
The trade services network will also be expanded based on the needs of clients. Sampath Bank has identified, recruited and groomed sector experts who, along with the Development Banking team, will be able to support and advise SMEs in order to ensure the success of these ventures.
The expertise, focus and dedication of the Sampath Bank Development Banking team will continue to serve as the ultimate support to those seeking project and MSME financing, ensuring development and upliftment not just for individuals and companies but for communities and the country as a whole.
