Sri Lanka former war zone gets cheap loans to revive businesses

The programmes helped promote livelihood and income generating activities among conflict-affected households and refugees in the Northern Province, a statement said.

The bank allocated 3,000 million rupees for a separate credit line named “Awakening North�, introduced a special credit guarantee scheme to promote loans through Participating Financial Institutions (PFIs) and launched a poverty alleviation microfinance project in the Jaffna Peninsula.

It also conducted financial literacy programmes to make the people aware of the facilities available in which 35,250 people in the Northern Province took part.

“Under the credit lines, PFIs were provided with a package of services and inputs including refinance at a low rate and credit guarantee to extend financial facilities to the deserving segment of the population,” the statement said.

“Such credit lines were designed to provide assistance for resumption of former businesses, income generating activities and livelihood of the affected persons and households facilitating them to reactivate their economic life.”

The loans were given for agriculture, livestock, fisheries, small and medium sector enterprises (SMEs) and micro-business sectors.

The central bank relaxed some conditions on loans and introduced a system of credit guarantee to mitigate the risk of PFIs and to encourage them to penetrate the rural agricultural market.

“As a result, the extent of land cultivated with bank finance and the number and volume of loans granted for short term cultivation, increased sharply,” the bank said.

PFIs also provided facilities for long term investment in agriculture, such as for perennial crop cultivation like grape and banana, construction of minor irrigation systems and purchasing of agricultural machinery.

Loans were also granted for construction of cattle sheds, cultivation of animal fodder and purchase of equipment for livestock development.

In 2010, PFIs were able to grant 417 loans to the value of 311 million for the fisheries sector to buy boats and equipment, fishing gear, marketing dry fish and to start self employment projects among the fishing community.

The central bank also introduced a special loan scheme for SMEs in the Northern Province in 2010 considering the number of such businesses affected.

PFIs granted 5,351 loans to the value of 948 million rupees under three SME loan schemes operated in the province.

A loan scheme for poor families was also launched which was able to reach 422 villages in the Northern Province and 23,233 low income families were formed into groups.

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