Six banks to lend Rs. 3 b to economically awaken the North

* 90% of the total sub project cost, subject to a maximum limit of Rs.200,000/- per borrower.
* The rate of interest to the borrower is 12%
* Repayment period could be extended up to the maximum of 5 years including a maximum grace period of 6 months
* The PFIs are eligible to obtain refinance from the CBSL at 6% per annum
* Prospective borrowers are required to provide at least 10% equity contribution
* The borrower could bring the equity capital in the form of cash, kind, material or managerial capacity

Under a Presidential initiative six banks will begin lending initially Rs. 3 billion to a range of sectors to economically awaken the North.
Titled “The Awakening North” the details of the Special Loan Scheme for Resumption of Economic Activities in the Northern Province was discussed by President Mahinda Rajapakse on Monday with CEOs of banking institutions.
The scheme exclusively designed for the development of the Northern Province by the Central Bank will strengthen the banking sector’s contribution to the development of the Northern Province.
At the meeting chaired by President, MP and Senior Advisor to President Basil Rajapaksa, Ranjith Siyambalapitiya, Deputy Minister of Finance, Mr. Ajith Nivard Cabraal, Governor, CBSL, CEOs of Participating Credit Institutions (PCIs) and Senior Bank Officials were also present.
The following Financial Institutions which operate branches in the Northern Province, have been identified as the PFIs under “The Awakening North” Loan Scheme: Bank of Ceylon, People’s Bank, Hatton National Bank, Commercial Bank, Seylan Bank and SANASA Development Bank.
These banks will provide credit facilities for capital investment for the resumption of economic activities in agriculture, livestock, fisheries, micro and small enterprises. This could boost the livelihood development of the people in the Northern Province of Sri Lanka.
Central Bank said Rs.3,000 million is earmarked to be disbursed initially under the Loan Scheme at a concessionary rate of interest among the eligible Micro, Small and Medium scale Enterprises (MSMEs) through the PFIs.
Under the proposed Loan Scheme, credit facilities would be available for agriculture and related activities, livestock development projects, fisheries and related activities, micro and small scale enterprises and trade and other self employment projects. The PFIs are requested to provide 90% of the total sub project cost, subject to a maximum limit of Rs.200,000/- per borrower. The rate of interest to the borrower is 12 percent and the repayment period could be extended up to the maximum of 5 years including a maximum grace period of 6 months depending on the nature of the activity. The PFIs are eligible to obtain refinance from the CBSL in respect of loans granted under the Scheme at 6 percent per annum.
The PFIs are permitted to provide credit facilities to eligible borrowers to commence new income generating activities or to expand their existing IGAs. As usual, the prospective borrowers are required to provide at least 10% equity contribution of the estimated cost of the project. The borrower could bring the equity capital in the form of cash, kind, material or managerial capacity. Security/collateral for such borrowing could be determined by the PFIs in negotiation with the borrower according to the creditworthiness of the IGA and the respective borrower.
The Regional Development Department of the CBSL will be responsible for the implementation of the Loan Scheme.