Banking relief measures to assist affected Small and Medium Enterprises

Sri Lankan banks, as agreed with the Sri Lanka Banks’ Association (Guarantee) Ltd (SLBA), are to provide further relief measures to affected Small and Medium Enterprises (SMEs).

Banks have been requested by the Central Bank to contact their banks before March 31 to access these relief measures, the banking regulator said in a media release.

Based on the repayment capacity and the submission of an acceptable business revival plan by the borrower, the relief measures extended to affected SMEs include rescheduling of credit facilities up to a period of 10 years, extending the time to commence repayments based on the capital outstanding, waiving off unpaid interest subject to conditions, and providing new working capital loans. Despite the availability of the above relief measures, limited number of borrowers had approached licensed banks to avail themselves of these benefits to date.

In addition to the above measures, with the gradual recovery of the economy, in order to facilitate the sustainable revival of businesses that were adversely affected during the recent past, several other measures were taken by CB together with the banking industry.

Accordingly, strengthening the Post Covid-19 revival units of licensed banks, the CB issued Circular No. 02 of 2024 dated 28.03.2024 on “Guidelines for the Establishment of Business Revival Units of Licensed Banks” mandating banks to establish Business Revival Units (BRUs) to assist viable businesses that are facing financial and operational difficulties.

Under BRUs, banks may provide support to viable businesses, such as restructuring and rescheduling of credit facilities including the adjustment of interest rates, maturity extensions, providing interim financing, advisory services etc, subject to the condition that such borrowers are required to submit acceptable business plans and feasible repayment plans. As reported by banks, by the end of 2024, around 6,000 facilities had been facilitated through these BRUs.