ECONOMYNEXT – Sri Lanka’s newly set up National Credit Guarantee Institution Limited, has issued 116 guarantees which has allowed shareholder banks and finance companies to give 600 million rupees of loans to small and medium enterprise, Chief Executive Jude Fernando said.
The NGCIL, gives a 67 percent credit guarantee for loans given by participating lenders.
The agency was set up as a private public partnership, with 90 percent of the equity contributed by the government through a 50 million dollar loan from the Asian Development Bank.
The balance 10 percent stock is held by 13 banks and finance companies which are using the guarantees.
“Under the guarantee program, NCGIL is providing individual guarantee to cover to its shareholder financial institutions to encourage them to grant loans for viable projects based on cash flows instead of depending on tangible securities,” Chairman Ajith Abeysekera said.
“Through this credit guarantee mechanism, NCGIL aims to unlock the potential of micro-SMEs, enabling them to invest, innovate, and contribute more robustly to the nation’s economic prosperity.
“This initiative aligns with the government’s effort to promote entrepreneurship, enhance financial inclusion, and create an enabling environment for SMEs to thrive.”
In Sri Lanka, SMEs contributes to 52 percent of gross domestic product and employes 45 percent of the workforce, Leah Gutierrez, head of ADBs, Sectors Department 3 said.
Bank credit granted to SMEs during 2023 was 704 billion rupees, which is only 9 percent of the total loans extended to the private sector by licensed banks, she said.
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The NCGIL has issued 426 million rupees of guarantees, covering 67 percent of the credit risk of partnering lenders.
NCGIL is pursuing a business model where digitalization is used to improve service to its customers, and has a priority focus on women-owned enterprises and climate finance. (Colombo/June04/2025)