Cabinet approval for debt relief package to SME sector

November 27, 2024

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Cabinet approval for debt relief package to SME sector ^Featured

January 16, 2020

Cabinet approval has been granted to provide a debt relief package to the Small and Medium Enterprise (SME) sector, Co-Cabinet Media Spokesman Information & Communications Technology, Higher Education, and Technology & Innovations Minister Dr. Bandula Gunawardane said.The country’s SME sector was severely affected by a major economic crisis during the past five years. As a result of a number of discussions held between the Central Bank, commercial banks and private sector financial companies and Prime Minister and Finance Minister Mahinda Rajapaksa, the Cabinet of Ministers approved a special debt relief package for SMEs.

Accordingly, all loans up to Rs.300 million obtained as at 31 December 2019 would enjoy a one-year moratorium on capital repayment while interest would have to be paid.The freeze on capital repayment is for both performing and Non-Performing Loans (NPLs) with banks having to consider restructuring the latter in addition to freezing the seizure or sale of assets.

The interest penalty will be removed on NPLs as well.Relief will be granted on cumulative interest depending on the quantum of repayment of the initial capital of an NPL. Licensed banks have also been instructed to provide a three-month working capital with a three-month grace period which will be paid within six months.

SMEs who have been servicing the loans will be supported with fresh five-year loans up to Rs. 300 million if needed with a one-year grace period to expand their business activities at an interest rate below 10% based on new business plan.He said that the SMEs should make a request in writing from the banks for this before January 31, 2020 to obtain this benefit.