SMIB Bank targets middle and low income groups

by L.S.A. Wedaarachchi

The State Mortgage and Investment Bank (SMIB Bank) has decided to increase its branch network to give greater access to the middle and low income groups who need funds to build houses.

The Matara and Chilaw branches will be opened this month. Ten branches will be set up in Ratnapura, Badulla, Hambantota and Puttalam. At present the SMIB has branches in Galle, Gampaha, Kandy, Kegalle and Matugama apart from the head office in Colombo.

Explaining the policy behind the present SMIB activities, SMB Chairman C. Weerakkody said that the SMIB is the only bank to spell out priorities targeting the less profitable, but more deserving segments of the society.

More attention has been focused now on the highest end of the market condominium housing in the city of Colombo and luxury detached developments in the suburbs. This reflects the growth prosperity of certain sections of our populace but does nothing to address the national housing shortage which affects the less affluent people across the entire country, he said.

"SMIB products have targeted the low and middle income groups which include not only low interest - long term housing loans but also a newly agreed upon joint effort with the urban development authority to build affordable houses for public sector employees.

Our bank is also making a concerted effort to expand its housing loan portfolio among plantation employees," he said.

The SMIB introduced two new products namely "Speed loan" and Suramya recently. The housing loan applications of speed loan are processed within 72 hours. It has proved to be extremely popular with customers.

"Suramya" offers finance for second generation improvements or extensions to existing houses. Although the need for (SMIB) financing is great especially in the cities, the SMIB is the only bank which took steps to finance that segment.

The SMIB is exploring a series of joint venture projects with the UDA to provide houses for public sector employees in the towns where they work. The UDA will identify and develop the relevant properties, while the SMIB will help these employees to finance their purchase with low-interest housing loans.

According to the SMIB Chairman unlike a private company, that is focused entirely on profits and shareholder value, the SMIB considers its responsibilities to society and the national economy. "It is part of our task to participate in the uplift of the conditions of people by helping them build and renovate their houses, thus fulfilling a basic human need.

It is in this context that we view both our activities and customers. We strive to combine good business practices and operating efficiency with consideration for the needs of borrowers, many of whom are poor and lack access to reliable sources of income, the Chairman said.

The SMIB drew its attention to the estate sector for housing finance. The estate workers who contributed greatly to the national economy have been widely neglected by most organisations. Loan facilities amounting to Rs. 111 million were granted to 2017 estate sector workers last year, public sector employees could also obtain a housing loan from the SMIB.

It arranges 75 percent of the EPF balance under a very low (loan) interest as a housing loan. According to the SMIB General Manager Ajith Weerasingha more than 3,000 of such loans are being released per month by the SMIB.

Some government organisations such as the Ports Authority and State Timber Corporation invested in the SMIB and arranged housing loans for their employees. The SMIB interest on such housing loans in four percent and the balance interest is borne by those organisations, the GM said.

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