LB Finance champions digital financing solutions to MSMEs

LB Finance MD Sumith Adhihetty (second from left) with Hiran Textiles Proprietor/New Trade Association – Nittambuwa Secretary Hiran Pieris. Others from left LB Finance DGM – Strategy and Digital Finance Bimal Perera, Channel Manager Dinuka Perera, and Senior Team Lead Lashan Dinusha 

LB Finance (LBF), the country’s leading Non-Banking Financial Institution, has reinforced its vision to be the preferred financial service provider among the MSME (Micro, Small and Medium Enterprises) sector with the launch of innovative CIM Business Loan to cater to the increasing working capital needs of the sector. 

The company envisions to champion the concept of digital financing among MSME entrepreneurs, an often-neglected sector by the majority of lending institutions due to the inherent risks and vulnerabilities and support their growth ambitions through CIM Business Loan (CBL).

CBL is a pioneering digital loan product giving the MSME entrepreneurs the vital access to a flexible and a highly affordable credit solution. The uniqueness of CBL is that credit evaluation is purely based on the assessment of the business viability and soundness of cash flows of the MSME, as opposed to the conventional method of requesting the borrowing entity/entrepreneur to pledge movable or immovable assets as collateral. 

LBF uses an array of key data variables collected digitally and further validated by evidence collected at sight to build comprehensive credit scorecards, enabling the company to maintain a consistent underwriting practice whilst also ensuring robust credit risk management. CBL’s entire loan experience, starting from loan origination, underwriting, disbursement to recovery have been fully digitised, enabling the company to achieve greater scalability and efficiency whilst offering the borrowers unparalleled speed and convenience. 

As per the last available statistics (2013), the MSME sector in Sri Lanka accounts for 90% of all businesses in the country, provides 45% of employment, and contributes 52% to the nation’s GDP. Successive Sri Lankan governments have, thus, correctly identified the importance of MSMEs as one of the main drivers of growth and development. However, while this sector makes up the backbone of the Sri Lankan economy, it continues to be one of the most vulnerable to local and global economic disruptions. The COVID-19 pandemic has intensified the traditional vulnerabilities among MSMEs, such as low levels of savings, assets, and inventories.

Speaking on the company’s commitment to MSME sector, LBF MD Sumith Adhihetty said: “As a company with over five decades of experience in the Sri Lankan financial services industry, we are acutely aware of the needs of the MSME sector and the challenges they have been experiencing both pre-and-post pandemic period. Our credit solutions are always aimed at bridging the credit access gap in the market, especially at the bottom of the pyramid, bringing a greater financial inclusivity among the informal sector.” 

Speaking on LBF’s strategy towards digital lending to MSMEs, DGM – Strategy and Digital Finance Bimal Perera said: “Despite various incentive programs announced by successive governments, access to affordable credit has remained an unresolved challenge among the informal sector entrepreneurs. Higher credit risk and lack of collateralised assets have kept formal sector financial institutions from accommodating MSMEs and this situation has worsened over the last two years due to the pandemic. 

“Our company has taken a proactive approach to fill the prevailing credit gap and explored data driven digital financial solutions to overcome this challenge. Our loan product is unique, and its pioneering automated loan recovery mechanism powered by LB CIM App makes it extremely convenient to the borrower and cost efficient to the company.”

CBL is requested, disbursed and recovered using the LB CIM (Cash-In-Mobile) Business App, a smartphone based mobile wallet solution, built for the benefit of MSME entrepreneurs. LB CIM smart phone App is available for Android & IOS devices. It comes in the form of two separate mobile applications; ‘CIM customer App’ & ‘CIM Business App’, to cater to the specific needs of customers and merchants. CIM is a Central Bank of Sri Lanka approved mobile wallet-cum-digital bank account developed with strict adherence to the applicable payment related mobile security guidelines. Further, CIM App is integrated with the National QR payment platform LankaQR, enabling inter-operability for QR based transactions via any LankaQR compliant smartphone app. LB Finance believes CIM Business App provides MSME entrepreneurs with a simple platform to manage their business cash flows efficiently and securely whilst also earning an attractive interest on the savings balance stored in the mobile wallet.  

LB CIM powered Automated Loan Recovery (CALR) was recognised as the Best Business Model Innovations at the recently concluded inaugural FITIS Digital Excellence Awards. As per FITIS (Federation of Information Technology Industry Sri Lanka) the country’s apex body of the ICT industry, the award category focussed on evaluating innovative business models for their ability to reconfigure existing business models thus enabling business transformation. 

From its humble beginnings in 1971, LB Finance has seen remarkable growth over the last five decades, establishing its position today as Sri Lanka’s leading Non-Banking Financier. The hallmark of its success has been the Company’s ability to adapt and innovate its product and service offerings to cater to the ever-changing needs of the local consumer. Company believes the agility and the dynamism in its business model are the key attributes in sustaining its performance at the highest level in this highly competitive financial services space.