NDB signs Credit Line of Rs. 2.4 billion with KfW

NDB signed a Credit Line Agreement (CLA) with KfW of Germany and Government of Sri Lanka (GOSL) on July 14 at the Finance Ministry. The credit line is for Euro 20 mn which equals to Rs 2.4 bn. KfW is a leading development bank in Germany and has been associated with the NDB for the past two decades for granting credit lines. In earlier occasions, KfW has granted credit lines for environmental projects, micro sector financing, SME and large sector projects.

With the availability of this new credit line, the bank will offer credit facilities by way of sub loans and leases for long term investments in privately owned enterprises in Sri Lanka.

This is the second Credit Line of this nature to be granted by the KFW with the first Credit Line of DM 60 million granted in 1999.

NDB will channel the proceeds towards financing foreign costs involved in projects promoted by the private sector enterprises. As per the lending guidelines 100% of the cost of imported machinery, 80% of cost of locally purchased machinery, and 70% of the construction cost can be financed under the credit line.

KfW has also made provision in the agreement to finance 40% of the investment in the permanent working capital.

NDB will also grant sub loans under this credit line towards small and medium enterprises (SMEs) as well as large scale enterprises. In the case of SME's, the definition used is those projects where the total investment in fixed assets ( excluding the value of land and buildings) do not exceed Rs.70 million after granting the sub loan. Maximum sub loan that could be granted for such SMEs is Rs. 35 million. Sub loans can be granted towards large scale projects too where the assets value exceed Rs.70 million.

With the availability of this credit line NDB's presence in the project financing will be further strengthened.

NDB from its inception in 1979, has granted over Rs. 120 bn for development projects in Sri Lanka and spearheaded the project financing in the country.