The Sri Lankan government has unveiled a comprehensive relief package aimed at supporting Small and Medium Enterprises (SMEs) struggling with loan repayments. The initiative, developed in collaboration with the Central Bank of Sri Lanka (CBSL), the Sri Lanka Banks’ Association (Guarantee) Ltd. (SLBA), SME sector representatives, and relevant government agencies, seeks to provide financial breathing room for SMEs while safeguarding the banking sector’s stability.
Eligibility Criteria
- SMEs with credit facilities classified as Non-Performing Loans (NPL) on or after April 1, 2019, by licensed banks.
- SMEs initiating discussions with Relief Banking Units and submitting required documentation before March 31, 2025.
The relief measures include the suspension of Parate Execution until March 31, 2025, allowing SMEs to engage in revival plans. Eligible SMEs may also receive working capital loans based on repayment capacity and a credible business revival plan. Credit Information Bureau (CRIB) reports will not be the sole basis for loan rejections, and banks must provide a breakdown of capital, interest, and other charges upon request.
Specific relief measures include reasonable interest rates for restructured loans, extended repayment terms up to 10 years, and the suspension of legal actions during the relief period. The government has also introduced a grievance handling mechanism to ensure fair property valuations for auctions.
The government will establish an Advisory Committee for SMEs under the Ministry of Industries to coordinate policy development and stakeholder activities. Additionally, a scorecard mechanism will be introduced to improve SME access to finance, and the National Credit Guarantee Institution Limited (NCGIL) will provide credit guarantees starting January 2025.
With SMEs contributing over 50% of Sri Lanka’s GDP, this package addresses challenges from the Easter Sunday attacks (2019), COVID-19 pandemic, and the economic crisis of 2022, which resulted in 494,000 NPLs worth Rs. 886 billion. These measures aim to revive the SME sector while ensuring economic stability and growth, reaffirming the government’s commitment to long-term development.
