The government’s decision to stop recovery of loans from banks up to Rs. 300 million in the small and medium enterprises (SMEs) sector was taken after a careful study with the Central Bank and the Finance Ministry, said State Minister Information and Communication Technology, Lakshman Yapa Abeywardena.
Minister said that they do not see any negative impact from this to the banking sector. “However if the government observes any threat to the local banking sector as a result, it will come out with a ‘special incentive package’ drafted by the Central Bank to assist the banks.”
After the change of government, early this month we offered a series of tax concessions and these include several exceptions which in turn will help the banking sector to save billions of rupees. “These savings would be highlighted in their next quarterly balance sheets. The Government expects the banks to use part of such savings to revive the SME sector on a priority basis.”
He said that the Peoples Bank was created for the people and not to make huge profits by ignoring financial constrains of the people. “Hence the Peoples Bank and other banks could do more towards baling out the SME sector which were burdened by taxes and also high interest rates of banks under the previous regime.”
“We have issued directives to Chairmen and CEOs of all banks to suspend recovery of loans obtained by the SME sector only for a stipulated period.”
This concessionary action will be followed by a comprehensive package coupled with already announced tax concessions designed by the Ministry of Finance, economy and Policy development and the Central Bank of Sri Lanka which will support both the lender and the borrowers especially the SME sector,” he said.
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