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| Sunday, 8 May 2005 |
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Business |  |
| News Business Features Editorial
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Call to fill gap for social and economic uplift by L.S.A. Wedaarachchi A glaring gap between entrepreneurs in rural areas and banks is visible, although commercial banks have been operating for more than five decades in Sri Lanka. Sri Lanka has 70% of the economic power with the rural population, and commercial and mercantile banks must take steps to fill this gap for the economic and social uplift of the country. It has been revealed that there is a fear among rural entrepreneurs to obtain loans from commercial banks as they feel that they may lose their mortgage on land and house as well as their business, if they are unable to settle the loan or the monthly instalments regularly. Up to fairly recent times the loan interest rates have been more than 14%. According to newspaper advertisements on the board decisions of the commercial banks regarding recovering unsettled loans and the loan interest rates with relevant taxes were more than 20%. It is observed that most of the micro, small and medium scale rural industrialists lack adequate knowledge on technology, management skills and marketing strategy. On the other hand large-scale industrialists as well as urban industrialists are being looked after by the commercial and mercantile banks, because of their close relationship with the banks. Hatton National Bank (HNB) chairman Rienzie T. Wijetilleke said that banks should work with utmost national responsibility. He said to strengthen the economy, the rural population must be first strengthened. "When development loans are being considered, priority should not be given only to the mortgage, but also to the applicant's objectives as well as to his or her capabilities which should be considered carefully, he stressed. The HNB chairman said that there is a trend at present in the banking sector, where banks are not waiting for customers to come to the bank and banks go to the customers. These progressive policies should be extended, to the rural areas, he said. "Banks should have the adroitness to understand the customer and to build "confidence" between both parties. Such a relationship will not allow the customer to go for loans to individuals on higher rates. A spokesman for the Central Bank said that one of the main reasons to establish regional development banks was the need to bridge the gap between the banks and rural entrepreneurs. The progress shown by regional development banks during the last few years was commended by him. He said that mercantile and commercial banks also have an important role
to play for the success and expansion of the rural entrepreneur sector. |
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