HDFC Bank signs MOU with Central Bank

Housing Development Finance Corporation Bank of Sri Lanka (HDFC) signed a MOU with the Central Bank of Sri Lanka recently enabling the HDFC Bank to contribute to the Government’s objective of generating one million jobs through establishing over 25,000 new businesses, with the utilisation of resources in the villages.

The Central Bank of Sri Lanka (CBSL) and the Ministry of National Policies and Economic Affairs (MNP&EA) have jointly designed Swashakthi Loan Scheme for Micro, Small and Medium scale Enterprise (MSME) sector Development and Employment Generation, on behalf of the Government of Sri Lanka (GOSL). The main objective of the scheme is to generate employment opportunities, via providing financial support for new entrants and existing entrepreneurs who are already engaged in income generating activities in the Agriculture and Livestock, Industrial and Services sectors. Under this scheme, a special focus will be given to youth, young graduates, women, and differently abled persons.

The new loan scheme covers the categories of Agriculture, Livestock, Aquaculture, Organic Farming, Post-Harvest Technology, Industrial, Information Technology, Automotive, Construction, Electronic and Telecommunications, Farm Machinery, Handicrafts, Leather products,  Jewellery designing and manufacturing, Welding , Light Engineering and Fabrications sectors and other innovative technology areas. The bank expects to fulfil the financial needs of youth, youth graduates, women and differently abled people, at grass root level in order to meet the main objectives of the ‘Swashakthi’ loan scheme.          

The bank will assess the viability and strength of the project plans when granting loans and, under this loan scheme existing businesses will be given a maximum of Rs. 250,000 at a nominal interest rate of 5.5% per annum.

Under this scheme new entrants who are going to startup new businesses are need to channel through the Small Enterprise Development Division of Ministry of National Policies and Economic Affairs and they will receive a maximum loan of Rs. 200,000 together with Rs. 10,000 initial grant and final grant of Rs. 40,000 upon successful implementation of the project as per the business plan. HDFC has already proved its ability to achieve the objectives of earlier introduced credit lines by the CBSL. As a result of the effort made by the bank to promote Commercial Scale Dairy Development Loan Scheme (CSDDLS), the bank was able to canvass new commercial scale Dairy farmers who were willing to expand their existing dairy projects and start new dairy projects. The HDFC is proud to state that out of the total CBSL loan portfolio (Rs. 703 m), HDFC alone achieved a phenomenal disbursement of 41.25% (Rs. 290 m) and that too within a very short period of time (2013 onwards). 

HDFC Bank is also proud to state that the bank has contributed 29% of the country’s annual housing requirement of 50,000 units in the year 2015. The bank has also disbursed a further sum of Rs. 3.871 m to finance extensions to existing housing units and contribute 2.39% to the average decline in the number of individuals below the poverty line in 2015. (2015 CBSL Annual Report)

The bank’s unique doorstep banking service which has widened the operational scope far beyond the physical limits of the branch network will support the bank to directly access thousands of customers located in rural and semi urban areas. Moreover, HDFC’s past experience in working with rural and urban populations for more than 32 years will ease the effort of achieving the objectives, stated above.