CBSL approval not required for US-funded lending operations in SL
HNB, JKH to disburse USD 4 mn
By Shamindra Ferdinando
Approval of the Central Bank of Sri Lanka (CBSL) was not required for the launch lending schemes here with overseas funding, a senior official said yesterday when he was asked whether the Hatton National Bank (HNB) and John Keells Holdings (JKH) had obtained CBSL approval for lending USD 4 mn to micro, small and medium-sized enterprises (MSMEs) in the food sector made available by the US.
The US Embassy, in a statement, dated Dec. 29, called the USAID-funded lending operation an innovative supply chain facility meant to disburse capital through Keells Supermarkets and HNB. Asked whether regulatory authorities monitored such schemes, the official stressed that “money
lending is not a regulated activity though deposit taking from the public comes under the purview of the CBSL.”
According to the US Embassy, this facility would provide MSMEs with competitive fixed interest rate financing. “The facility lent a total of USD 430,000 to eight suppliers in its first weeks of operations. The partnership plans to support approximately 100 MSMEs to obtain USD 4 million worth of credit over six months,” the embassy said.
The official said that current laws and regulations did not in any way hinder such lending operation. The statement quoted Gabriel Grau, the USAID/Sri Lanka and Maldives Mission Director as having said: “Sri Lankan enterprises face increasing pressures due to recent global supply chain disruptions, high energy costs, volatile inflation rates, and economic instability. This supply chain financing facility alleviates some of the pressures and enables MSMEs to optimize their working capital.”
According to recent statements issued by the US embassy, WFP et al as well as Parliament, the USAID has provided funds for several initiatives ranging from fertilizer to awareness programmes for primary school children.
Political sources told The Island that in the wake of the last presidential election in Nov 2019, the USAID had declared its intention to step up operations here. The then President Gotabaya Rajapaksa in June 2021 discussed the status of USAID projects in Sri Lanka with Reed J. Aeschliman, senior official in charge of their Sri Lankan Office. They had agreed to accelerate the development projects, sources said, adding that the continuing crisis here has paved the way for accelerated interventions.
