Berendina awarded country’s first micro-financing licence from CB
View(s):Berendina Micro Investments Company (BMIC), the micro-finance arm of Berendina in Sri Lanka, was recently granted a licence to operate micro-financing by the Central Bank of Sri Lanka (CB), a first in the industry under the Microfinance Act No 6 of 2016.
BMIC will now adhere to CB’s guidelines as a licensed microfinance company. The license was not just a long standing need for the organisation but also for all the microfinance companies to ensure a healthy microfinance industry in the country, the company said in a media release.
With this recognition there are many advantages for clients and Berendina. BMIC can now inculcate the habit of savings among its clientele by taking saving deposits as collateral against the loans. This in turn will help to reduce the cost of funds of the company and futher contribute to reducing loan interest rates. Providing the best interest rates to its clientele is one of the primary objectives of the company.
BMIC is owned by Berendina Development Services (BDS), a not-for- profit organisation which focuses on addressing challenges faced by poverty-stricken communities, and spends around Rs. 250 million yearly on these projects. It provides access to clean water, health services, programmes for elders, housing, economic and social infrastructures, value chain developments, livelihood interventions such as inland fishing, amongst others including lobbying and advocacy initiatives for rural and plantation communities. Berendina also has a third unit called Berendina Employment Centre (BEC) which targets youth and provides scholarships for Advanced level education and increasing their employability in the job market.
BMIC operates across 11 districts through 30 branches and 4,600 clusters that consists around 110,633 members. There are almost 100,000 active borrowers with the average loan size being Rs. 61,000. The loan portfolio balance outstanding is Rs. 2.92 billion. It also has the lowest interest rates among NGOs and private sector micro-finance institutions in Sri Lanka.
“The company uses Progress out of Poverty Index (PPI) an international accepted poverty measurement tool, in measuring its clients’ poverty status. This helps to measure BMIC’s outreach to population living under different poverty lines and track their reach out of poverty when they progress from one loan cycle to the next. Its clients exhibit a reduction in their poverty levels from one loan cycle to the next indicating their improved living conditions and overall wellbeing with the creation of enterprises supported by BMIC microcredit and enterprise development services and through interventions for useful assets accumulation by those families,” the release added.
BMIC makes every effort to support their clients move out of poverty. Unlike many other institutions, BMIC provides enterprise development services such as relevant training, business counselling, marketing advisory and support in addition to many of its social services such as cash benefits during hospitalisation and for funerals. Over 45,000 were trained in 2018 under the enterprise development services.
Going beyond microfinance and enterprise services, BMIC during last year funded 1,157 Bright Student Scholarships (BSS) while its sister organization, BEC provided 1,259 scholarships to the bright students in poor families who are not BMIC clients in the same villages. BSS provides a monthly cash allowance for the 2-3 year periods for each student for their Advanced Level studies. The value of scholarships provided in a year is over Rs. 32 million.
BEC provides employment opportunities through career guidance, vocational and professional training, and are then linked to private sector companies for prospective employment. To ensure this, BEC spends an average Rs. 80 million yearly.
The company’s journey began as Berendina Foundation in 1992, when interest-free loans were issued. Later on the company moved to an interest-based model. In 2007, Berendina Microfinance Institute (Gte) Ltd was established to pave the way for a clear, concise path of providing focused and specialised micro-financing solutions. With the motive of obtaining CB’s microfinance license, BMIC was re-launched as a public limited company and fosters a corporate philosophy based around the 3Ps- People, Profits and Planet.
The limited profit earned by BMIC is partly reinvested in the company while the balance profit is used for BDS and BEC activities giving benefits again to the vulnerable people in the same community. No profits are used for the benefit of individuals or other organisations, the company said.