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| Wednesday, 17 November 2004 |
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PM tells banks, financial institutions : Focus more on rural lending by Channa Kasturisinghe Prime Minister Mahinda Rajapakse has called upon banks and financial institutions in the country to repose more confidence in people in rural areas when granting them loans and to focus more on assisting them financially in order to alleviate poverty in the country. The Premier said that certain banks and financial institutions are reluctant to grant loans to poor people in rural areas because of the misconception that they are more prone to default. He was addressing a ceremony to mark the 15th anniversary of the Gami Pubuduwa micro finance scheme of Hatton National Bank (HNB) in Colombo on Monday. "I myself come from a rural area and I know that they are trustworthy people. Therefore we shouldn't hesitate to provide them loans. However, the banks should have a proper mechanism to train and teach them to effectively manage their income. " the Prime Minister said. He said micro finance schemes such as Gami Pubuduwa are vital because over 70 percent of the country's population is constituted of people in the rural areas. "When we look at the economy we have to ask ourselves certain questions. Have be been able to promote the lives of poor people in this country? Have programs such as Janasaviya and Samurdhi been effective in alleviating poverty? That is why the banks should increase their focus on this kind of schemes," the PM said. HNB Chairman and Managing Director, Rienzie Wijetilleke said that Gami Pubuduwa has proved that rural lending is recoverable as the rate of repayment of the loans is over 95 percent. "Banks in the past failed to achieve the expected results from their micro finance schemes due to the poor relationship between bank officials and the village people. We also had our setbacks but we overcame this problem by training our officials and increasing awareness among the recipients," he said. Wijetilleke, however, pointed out that the country's corporate sector had very limited resources in contributing to rural development and therefore the Government should not burden the sector with unreasonable taxes. Central Bank Governor Sunil Mendis said that the enthusiasm of the private sector to support the government's programs to develop rural areas such as `Dahasak Mahawev' would augur well for the country's future development. Former Central Bank Governor A.S Jayawardana said that public and private sector banks should give due recognition the bank officials who work in rural financing schemes and reward their efforts. ***** Rs. 3 b in loans to alleviate poverty under Gami Pubuduwa The Hatton National Bank (HNB) is planning to grant loans up to the tune of Rs. 3 billion in the next five years under its Gami Pubuduwa micro finance scheme in order to help alleviate poverty in rural areas. The bank's Deputy General Manager (Personnel Banking) Chandula Abeywickrama said the bank is planning to issue 40,000 loans from 2005 to 2010 which would benefit over 500,000 people in rural areas. "Gami Pubuduwa(GP) which was launched in 1989 by setting up the first GP unit at Pubbowa, Kurunegala has so far benefited over half a million people. During the last 15 years there were 50,000 direct beneficiaries. We expect to double that number in the next five years," Abeywicrama said. He said that the HNB has set up 104 GP units through out the country in addition to its 144 branches. "In the first five years the cumulative total of loans granted was Rs. 132 million. It set the trend for the years to come. By 1999 the amount reached Rs. 1.63 billion. During the last five years we increased our maximum loans from Rs. 250,000 to one million rupees and the cumulative total of loans reached Rs. 3 billion," Abeywicrama said. |
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