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The full team behind the initiative at ICTA, NDB, and PayMedia
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| PayMedia Founder and CEO Kanishka Weeramunda |
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| NDB Kohuwala Branch Manager Kuraish Sappidin
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Recently, the ICTA unveiled a credit scoring framework as part of its efforts to support startups. Developed in partnership with PwC, the framework helps banks identify the creditworthiness of startups that apply for loans.
The initiative addresses a fundamental issue that has hindered the growth of Sri Lankan tech startups. Already, it has begun helping local startups. Recently, local fintech startup PayMedia secured an Rs. 85 million loan from NDB because the bank adopted this framework.
Since its founding in 2014, the startup has worked closely with the banking industry. The company was the first to introduce real-time cash deposit machines to Sri Lanka and has developed a range of payments solutions. Over the years, the company has won several awards for these products. It has also launched a subsidiary called DirectPay, which specialises in digital payments and recently crossed the milestone of processing Rs. 3 billion payments.
Despite its close relations with the banks, it was a time-consuming process to get funding from them. Kanishka elaborated, saying, “It can take anywhere between four to six months to get a response. After four months, then you’ll hear, ‘We’ll fund 50% of the project.’ But as a startup, you can’t do anything with that because you need the remainder too.”
The new credit scoring framework helps bridge the gap between Sri Lankan banks and startups. ICTA had developed it working with PwC alongside an industry-led steering committee. The framework evaluates startups based on four key factors. They are the capability of the founders and management team, market potential of the startup, its product/service, and financial health of the startup. By focusing on these four factors, it’s now possible for banks to analyse a startups’ intangible assets when assessing its creditworthiness.
Several banks have started looking at implementing the framework to give loans to startups. Among the first banks to adopt it is NDB bank. Speaking to Arteculate, NDB Kohuwala Branch Manager Kuraish Sappidin commented, “This framework is a positive move from the ICTA and PwC for the growth of the banking industry. It offers a great opportunity for startups to work with the banks and grow their business.”
As a startup founder, Kanishka describes the framework as a game-changer. Thanks to it, PayMedia secured an Rs. 85 million loan from NDB. He went onto share, “In the past, funding from banks was out of the question for startups. The most viable option was giving up equity to investors. But now a founder doesn’t need to give up equity or provide collateral to obtain funding.” As the Sri Lankan technology industry grows, the credit scoring framework by ICTA and PwC removes a key barrier for the continued growth of startups. Moreover, with PayMedia obtaining the Rs. 85 million loan from NDB, the road ahead looks optimistic.
