Sri Lanka to start directed lending for SMEs after talking to lenders: Central Bank

ECONOMYNEXT – Sri Lanka will start a directed lending program to ‘priority sectors’ in the small and medium industry sector after consulting with the banking community, the central bank said.

The monetary board of the central bank had decided that the micro, small and medium scale enterprises (MSME) was the ‘mainstay’ of the economy.

“Thus, the Board decided to introduce priority sector lending targets for the MSME sector in consultation with the banking community,” the central bank said in it January monetary policy statement where a policy corridor was maintained at 4.5 to 5.5 percent.

Directed lending has been a key part of central planning involving Soviet Gosplans and also Nehru’s five year plans analysts say.

Heavy industry was a key target of central planners at the time. Centrally planned credit programs however may lead to mis-allocations of resources. (Colombo/Jan19/2021)

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