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| Sunday, 9 January 2005 |
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Loan scheme to re-build SMEs The Central Bank (CB) has set up a special re-financing loan scheme to rebuild disaster-affected Small and Medium Enterprises (SMEs). Monetary board has approved Rs.5 billion for the scheme and it will operate through the commercial banks. CB said that a large number of SMEs have been destroyed by the tidal waves and the aim of the loan scheme is to provide capital needed to re-start those enterprises. The loans will be given at a concessional interest rate with a grace period to assist them to stand on their own. Under the scheme the government will provide 85% of the capital requirement as a loan and the balance will have to be borne by the entrepreneur. The CB will give the loans to commercial banks at an interest rate of 5% and they will give it to the entrepreneurs at 6%. One year grace period will be given for interest and principal payments. Under this special re-financing loan scheme the CB funds 100% of the loan scheme. In normal re-financing schemes CB provides 80% and the commercial banks provide 20% of the funds. CB assured that this loan scheme would not create additional money and therefore it would not alter government monetary policy. The funds for the scheme will be released from the special funds of the CB. |
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