Commercial Bank (ComBank) has emerged as the bank with the highest amount of loans approved, as at July 2, under the Central Bank (CB) scheme to support COVID-19 affected businesses.
According to a media release by the CB on Friday, 3,946 loans totalling Rs. 17,145 million has been approved for ComBank while in second position is the Bank of Ceylon with 2,607 loans amounting to Rs.6,803 million in the first two phases of the scheme.
This is out of a total of 20,240 CB-approved loans amounting to Rs. 53 billion to be disbursed in two phases. HNB had 1,671 loans totalling Rs.6,664 million, People’s Bank 4,232 loans worth Rs.6,112 million and Sampath Bank 1,482 loans worth Rs. 5,259 million while the rest of the banks represented lesser amounts.
The CB said it introduced the Saubagya COVID-19 Renaissance loan scheme to provide working capital loans at 4 per cent interest rates to businesses adversely affected by the COVID-19 outbreak, through banks, thereby supporting the revival of economic activity in the country.
This scheme is available for COVID-19 affected businesses with an annual turnover below Rs. 1 billion, including self-employment and individuals. The CB said that the scheme, which has been implemented in three phases, is expected to disburse a total of Rs. 150 billion in working capital loans.
The CB said out of approved loans, banks have already disbursed more than Rs. 21 billion among 10,270 affected businesses and individuals island wide as of July 2.
The CB announced Phase-III of this scheme with a credit guarantee and interest subsidy with effect from July 1 “with a view to accelerating lending at 4 per cent per annum using the already available excess liquidity with banks and to ensure adequate flow of funds for businesses which lack collateral to back their creditworthiness”.
“Accordingly, the CB will share a major portion of credit risk of end borrowers, while providing an interest subsidy of 5 per cent per annum to banks to cover their cost of funds. The credit guarantee provided by the CB ranges from 80 per cent for the smaller loans to 50 per cent for relatively larger loans,” the statement said.