- COSMI praises President for decisive move, encourages faster disbursement
- Urges funding of MSMEs based on business rather than collateral
Sri Lanka’s latest credit and refinancing support for private sector has been lauded by the country’s micro and SME sectors.
COSMI Founder President Nawaz Rajabdeen
“Finally, much-needed relief. We can now be optimistic of an economic revival,” said Confederation of Micro, Small and Medium Industries (COSMI) Founder President Nawaz Rajabdeen.
He welcomed the Central Bank’s 15 June roll out of new credit schemes at an estimated Rs. 100 billion to revive the economy. President Gotabaya Rajapaksa directed the Central Bank on 15 June to revive the severely handicapped business sector disrupted by COVID-19.
“We are now eagerly and impatiently awaiting for operating instructions from Central Bank to banking sector so that the new scheme can kick-start immediately.
A quicker disbursement shall result in a faster revival. The 4% interest is a reasonable rate in comparison to retail market rates. Still, we are call for extended repayment schedules, rather than a shorter deadline for repayments as MSMEs are struggling in a big way due to economic slowdown and COVID-19,” Rajabdeen said.
According to him it is most important to disburse this credit on a business basis and on business track records rather than on a collateral basis. “The bulk of micros and SMEs have been faced with massive losses and are unable to show significant collaterals at the moment – this is why it is important to focus on business based lending rather than collateral based,” he said.
“We call on the President to intervene in the same decisive manner towards other government institutions that are involved in Micro and SME support. Not only SMEs are more than 50% of our economy, we even saw their response capacity during COVID-19 lockdowns—their ability to deliver essential items and groceries with remarkable speed in Just in Time (JiT) fashion that saved people from hunger and even sustained urban communities. Therefore asking for collaterals from them should not be prioritised in this revival credit scheme,” COSMI Chief emphasised.
The Central Bank said on 15 June: “Growth of the Sri Lankan economy has fallen to dismal levels over the past few years, and the impact of the COVID-19 pandemic may result in severe stress on economic and financial system stability in the period ahead unless immediate remedial actions are taken.”
The Confederation of Micro, Small and Medium Industries (COSMI) was formed in 2019, and aims to revive and foster the MSME and industry sectors of Sri Lanka.