LFSUS to help under-served communities
Lanka Financial Services for Underserved Settlements (LFSUS) in
partnership with banks provides a wide gamut of housing needs. The
method adopted is a guarantee mechanism of LFSUS as a comfort for bulk
bank loans granted to MFIs to grant small housing loans to the rural
LFSUS will provide a credit enhancement mechanism to encourage banks
and MFIs and bridge the gap between banks, MFIs and rural folk to
finance underserved people.
LFSUS coordinates with banks to use MFIs as a vehicle to reach rural
folk and make them bankable. Formal financial institutions, such as
commercial banks have little, if any, experience in assessing the risks
involved to lend to the poor. LFSUS provides the community a means of
accessing loans through project partners.
The methods adopted by the organization in distributing the retail
loans to the community and by sustaining timely repayments will help the
self-sustaining project which will help expand the MFI's portfolios.
They will also receive technical guidance and support and advice on
overall risk reduction, cost reduction and mitigation procedures while
developing ongoing projects. The additional strength and networking
ability LFSUS provides help in negotiating loans with commercial banks
at prevailing market rates. LFSUS will carry out its own due-diligence
on these projects individually.
Low income householders in urban areas have great difficulty in
accessing loans from commercial banks as they are viewed as not being
creditworthy and reliable.
They can access new financing opportunities to empower and build
better living standards for themselves through these projects. The
householders selected for loans are not the poorest of the poor.
Since its inception, LFSUS has made a significant impact in uplifting
the living standards of rural communities spread across the country.
LFSUS launched 20 projects and helped nearly 2,000 families benefitting
nearly 6,000 people in the Central, Western, Sabaragamuwa, Southern and
North Central Provinces. Seven projects have been completed and the
loans repaid in full on the due date. This proves the success of this
LFSUS has now earmarked the war-devastated regions of the Northern
and North Central Provinces to carry forward the housing initiative to
the people to rebuild their lives after 30 years of strife with a house
they could call their own.
LFSUS recently arranged three bulk loans of Rs. 10 million each for
three MFIs in Medawachchiya, Kebithigollewa and Shrawasthipura
benefitting 265 families and 1,200 people. The money will be used for
houses, house upgrading, sanitation, waste water management, access to
clean water and lighting among other common amenities.
LFSUS has links with HSBC, Hatton National Bank, NDB Bank, Rural
Development Bank and Sri Lanka Savings Bank. The HDFC Bank, Sanasa
Development Bank and Bank of Ceylon will join LFSUS soon.
LFSUS has also invited blue chip companies to link with them to
embark on 'Village adoption programs' through these housing initiatives
under their Corporate Social Responsibility (CSR) project.
LFSUS was set up as a company limited by guarantee in 2007 in
partnership with the United Nations Human Settlement Program
(UN-Habitat) and the Ministry of Urban Development.
The United Nations in its endeavour to address the issues of poverty,
sanitation and housing for billions of marginalized communities across
the world, set up The Slum Upgrading Facility (SUF) Pilot program of
UN-Habitat in 2004 to address these issues.
The projects were initiated in Kenya, Tanzania, Ghana, Indonesia and
Sri Lanka. The success of this program in Sri Lanka has opened new
vistas for future development and expansion. UN-Habitat provided US $
1.4 million to LFSUS as seed capital to implement the credit enhancement