Sanasa Development Bank strengthens SME sector

Sanasa Development Bank GM/CEO Nimal C. Hapuarachchi

Sanasa Development Bank, which has been operating a very successful microfinance system in rural Sri Lanka, is now gearing to move to the next level. The bank has already begun to support the Small- and Medium-sized Enterprise (SME) sector and intends to expand on this initiative.

Sanasa Development CEO Nimal Hapuarachchi said: “This is the obvious direction this institution has to move towards, as we believe that our development is directly connected to the growth of our customers.”

The bank, which has already established a unique home grown model in supporting income generation and wealth creation in the rural sector, has its roots in the co-operative sector.

Sanasa Development Bank Chairperson Samadani Kiriwandeniya said: “This institution strongly believes in the concept that we must grow as a community and the destination of our journey is sustainable development. Our most important shareholders are the men and women who sustain the smallest units of our society.”

Elaborating on that, Hapuarachchi said: “That smallest unit is the family which has always been our primary focus. We are a family bank – the Sanasa family bank.”

The Sanasa family consists of close to four to five million people. The Sanasa co-operative movement has one million members; and going on the assumption that most of these members have families comprising of about four to five people, the Sanasa umbrella touches the lives of approximately 20% of the Sri Lankan population. 

“While micro financing was the backbone in terms of uplifting the country’s rural economy where the bank has been lending to the bottom of the pyramid with small loans between hundred and two hundred thousand, we believe that there is a segment in the lower rungs of our society who want to move to the next level. This means requiring larger loans to create big opportunities. Whilst in the past we encouraged people to look for such loans outside our network, we have now taken a strategic decision to keep supporting this segment so that we remain close to these entrepreneurs and as has been the practice of the bank, create synergies to grow together,” said Hapuarachchi.

The bank, whilst offering loans to their customers, keeps close tabs on their activities and supports them with training, capacity building and advisory services to enhance and grow their businesses. This in turn has kept the bank’s non-performing loans below 1% nett which is a benchmark in local banking standards.

“We are not into predatory lending and we carefully analyse our customer needs and the viability of the venture prior to lending so that borrowers and indirectly their families as well are protected from penury from a bad business decision. This very sustainable approach the bank has taken in the last 19 years has helped create a strong link of mutual trust between the institution and our customers. The Sanasa motto is to go beyond the lender, borrower relationship, that is the way in which the Bank supports its family,” the CEO said. 

The aim and structure of Sanasa Development Bank is attributed to one man, Dr. P.A. Kiriwandeniya, its founder Chairman whose vision, commitment and strong leadership has become legendary within the industry.   He foresaw the potential co-operative philosophy has in empowering the marginalised by working together to resolve their problems of needs and wants.

The visionary founder retired in 2011, handing over the reins to a professional team who is expected to take the bank to the future. The current board consists of four shareholder directors who are elected at the AGM by majority vote and four independent directors who are people of standing in society and industry circles i.e. veteran bankers, financiers and experts in the academic field. All appointments are subject to Central Bank approval. 

This institution is a public quoted company and has shareholders from grassroot level. Out of its 40,000 shareholders, 38,000 have bundles less than a thousand shares. “Whilst the Sanasa banking model is rural centric, it also acts as a bridge to connect the rural economy to the city. Whilst traditionally, rural financing has been controlled by money lenders and loan sharks, the Sanasa banking system which is under a special banking licence from the Central bank and monitored stringently by this institution, has brought in a sustainable source of financing for the upliftment of the marginalised people of our society,” said the CEO.

“I am also pleased to say that despite the various challenges faced by the bank during the year under review, we were able to record a ground-breaking performance as the bank’s net profit before tax surpassed the Rs. 1 billion mark for the first time in our history,” he added.