HDFC Bank assists young entrepreneurs under Govt. SME development initiatives

In line with the policy objectives by the Government, HDFC Bank has implemented various initiatives in the recent past in order to enhance the availability of financial facilities for SMEs in the country.

Under the Self-Employment Promotion Initiative (SEPI) loan scheme, the Bank had been able to provide financial assistance to start self-employment projects by trained youth who have passed out from vocational training institutions under the purview of the Ministry of Skill Development and Vocational Training (MSDVT). Though the trainees gain knowledge and skills in different technology areas and are fully competent, it is difficult for them to find a job since most industries are located in urban areas. Lack of financial facilities is also a major barrier for emerging entrepreneurs who wish to commence their own ventures. Hence, the SEPI is designed to provide financial assistance to trained youth who have completed the courses from recognised vocational training institutes, for the establishment of their own self-employment projects.

As a public-private partnership Bank, with the majority 51% shares held by the State, HDFC Bank has accepted responsibility to support the Government’s economic policies for income generation and employment creation. In this context, HDFC has made notable contributions towards the promotion of young entrepreneurs. HDFC Bank is the 2nd largest credit-disbursing Bank under the SEPI loan Scheme in the year 2017. According to MSDVT information as at 31 December 2017, HDFC Bank was able to finance 36 youths in various parts of the country to the value of Rs. 16.25 million.

Central Bank Governor Dr Indrajit Coomaraswamy recently requested the Banks to consider MSME loans to young entrepreneurs, and emphasised that it was the Banks’ collective responsibility to help young entrepreneurs to commence or improve their businesses, making them financially Inclusive. 

This loan scheme covers categories of agriculture, industrial, information technology, automotive, construction, electronic and telecommunications, food, refrigeration and air conditioning, farm machinery, digital imaging and printing, jewellery designing and manufacturing, welding and fabrications sectors and other innovative areas. HDFC Bank expects to further strengthen the credit disbursement in 2018 and fulfil the financial needs of youth who have undergone professional training in specific fields through vocational training institutions to start their own enterprise.          

Through the product diversification strategy, the Bank has introduced a range on financial products and services, in addition to the Bank’s core business of housing finance. These new products have opened up additional revenue streams for the Bank. 

In an event of scarcity of refinance in the CBSL credit schemes, HDFC Bank has introduced similar features of credit schemes through the Bank’s own funds. 

‘Saubhagya’ 

Loan Scheme

HDFC introduced the ‘Saubhagya’ Refinance Loan Scheme in collaboration with the Central Bank, to enhance financial support for the SME sector. This scheme mainly focused on the agriculture, fisheries, tourism and small industries categories to start new business or expansion of existing business. HDFC had disbursed Rs 39.26 million to Saubhagya customers in year 2017.

Commercial Scale Dairy Development Loan Scheme 

The Commercial Scale Diary Development Scheme for dairy farmers was introduced in 2014, in collaboration with the Central Bank of Sri Lanka, to improve SMEs in the dairy sector. This sector is considered to be of national importance in meeting health and nutritional needs of the country, and in conserving foreign exchange on imported dairy products. Dairy farmers can obtain financial assistance to purchase cattle, construct cattle sheds and engage in dairy-processing activities such as yoghurt, bottled milk, and ice cream etc. HDFC Bank had disbursed Rs. 105.28 million to dairy customers in 2017. In the year 2015, HDFC Bank contributed 42% of CSDDSL loans disbursed in Sri Lanka under this Government-sponsored scheme. In 2017, the HDFC banks contribution reflected a 6.3% contribution of CSDDLS loans disbursed, thereby showing most banks have participated in this laudable enterprise since then. Since 2014, HDFC bank has so far disbursed a cumulative sum of Rs. 753 million towards dairy farming in Sri Lanka.

Since 2014, under the product diversification strategy of the Bank, a sum of Rs. 2.3 billion had been granted among 13,000 SMEs in the country. In addition, the Bank is also actively pursuing new, niche market segments such as corporate and project finance to support entrepreneurs to reach the next level of their industry in 2018.