The Central Bank of Sri Lanka last week requested banks, financial institutions and leasing companies to scale-up special lending windows and have special SME desks to facilitate access to credit. The move is aimed at implementing the draft action plan on the subject of ‘access to finance’ in a Policy Framework for SME Development prepared by the Ministry of Industry and Commerce.

“During the workshops we held to educate on the new policy, we found that some of the several major issues raised by the SMEs were with regard to financing, collateral issues, problems in obtaining loans, etc. The lack of financial discipline was another factor that was observed and the banks have a major role to play in guiding them. The outcome of the brain-storming sessions held at the workshops were very useful in preparation of the action plan and we were able to identify the problems faced at the grass-roots level,” Secretary to the Ministry of Industry and Commerce, T M K B Tennakoon said addressing senior officials of Licensed Banks and Finance Companies during a workshop held at the Central Bank last week.

Other strategies listed in the draft action plan to expand ‘access to finance’ for SMEs include, the need for financial institutions to expand the SME re-financing schemes and banking clinics, explore the possibility of introducing a Treasury Guarantee Scheme and non-collateral based access to credit. The draft plan also recommends that viability-based lending be promoted and encouraged while angel funds and venture capital arrangements be promoted to inject equity participation in viable SMEs.

Tennakoon said an Inter-Ministerial Coordination Body proposed to be set up to function as the SME Policy Monitoring and Evaluation Committee (PMEC), will conduct quarterly progress meetings to assess the policy implementation progress and its outcomes. The Ministry of Industry & Commerce will function as the Secretariat of SME policy monitoring and evaluation committee. The National Council for Economic Development (NCED) – SME Forum, the apex body will be provided with progress reports on policy implementation.

“Further, on a periodic basis, SME survey should be launched to track the progress of SMEs, their challenges, issues and constraints. Such data will help the Government to design more effective policies and programmes,” the policy paper noted.