Minister of Finance and Mass Media, Mangala Samaraweera said that one of the main proposals made in the budget to create entrepreneurs, would be launched in March.
He said that those who obtain credit facilities would be given an interest subsidy of upto 75% of the effective interest rate.
Minister Samaraweera held a discussion with the Heads and the Chief Executives Officers of State and private banks at the Treasury last week.
State minister of Finance Eran Wickremaratne and high officials of the ministry were also present.
The Minister called upon all the banks to extend their fullest support to implement this program, to create new jobs through the expansion of the economy while aiming to expand exports.
The government expects the SME sector to be the backbone of the economy. However the lack of capital or the difficulty in accessing capital due to both the cost of capital and the requirement for collateral have been main the main impediments in the development of start ups of the SMEs.
Minister Samaraweera said, “Our objective is to ensure that no entrepreneur is ever denied credit due to the lack of collateral, but is able to access financing given viability of the project proposals.” The government expects to disburse Rs. 60,000 million through State and private banks to would be entrepreneurs and another Rs 5000 million has been set aside by the Treasury to reimburse the interest subsidy to the banks.
Under this scheme,15 different loan schemes have been proposed for young entrepreneurs in the fields of agriculture, fishery industries and small and medium enterprises. This scheme includes journalists and those who are self-employed as well.
In addition to young entrepreneurs, women and differently-abled persons will also be provided special opportunity to take part in this program.
Women and differently-abled persons who come forward to take part in this program will be offered additional interests subsidy of 10% and 15 percent more respectively.
The women will have to form a company at least with ten equity share holders and each share holder will have invested at least Rs 10,000. The government will extent a comprehensive support package which includes both non-financial and financial assistance including grants and the credit through the enterprise Sri Lanka credit schemes to these companies.The heads of banks assured the minster of their continuous support to this project to realise the governments objectives of creating one million new jobs, increase the per capita income and the expand exports through the program.
When entering the field to expand the small and medium scale business sector including self employment, the Minister informed the bank officers that the Government will not allow the banks to repay the loans, because of the impossibility of bailing to obtain the capital costs and loans.
As the Treasury has decided that hereafter it wll provide the collateral which are expected by banks from businessman, considering only the feasibility of the project proposal.The Government has decided to issue a Treasury bail for the debtors to obtain loans on concessional interest basis.