Sanasa Development Bank - the poor man's capital mobilizer
Founder Chairman of the Sanasa Development Bank Dr. P.A.
Pictures by Sumanachandra Ariyawansa
Sanasa Development Bank Ltd, has revolutionised banking practice by
not only establishing its customer base among the poor of Sri Lanka but
by also mobilizing financial resources among the city-based rich and
siphoning them to those areas of the country where poverty is starkly
Thus, Sanasa Development Bank, as its founder Chairman Dr. P.A.
Kiriwandeniya reveals in this interview, is not only a means to
narrowing the wealth gap in the country but also a chief catalyst in
Q: What's the mandate of the Sanasa Development Bank?
A: Sanasa is a movement. It has within it some 8,500
community-level and primary level societies. Sanasa was set up by a
Cooperative Act; it is some kind of Cooperative Society.
But based on these community organisations we founded our company,
which is involved in direct business. A cooperative is usually involved
in social welfare activities also. It is involved in various activities
at the community level including those of a financial nature. But based
on the Sanasa community societies we believed we also needed a strong
financial and business arm.
So we introduced a four pillar approach. We analysed the market
economy and found four areas which are very profitable. One is the
banking and financial industry. Second is the insurance industry, third
the construction and development industry and fourth, the production and
These are the most profitable areas in the market economy. One of the
most basic problems faced by the rural poor is that they do not possess
proper financial services. There is no insurance industry in the rural
This is confined to the business community and the upper middle
class. The poor have no awareness of the insurance industry, they think
it is a luxury. So, there is good potential for growth in the insurance
industry. In the area of construction and development, contractors earn
The poor have no access to these areas. Nor do they have access to
scientific and engineering facilities. Then comes marketing which is a
big issue for the rural people.
More than 40 percent of what they produce is wasted. There is no
proper market network, no purchasing system, nor do the poor possess an
organisation to perform these functions.
These four areas we took over. Now we have a very strong network at
the village level.
In 1997, after negotiations with the Central Bank, we launched our
banking programme, That is, the Sanasa Development Bank was founded. We
are like any other development bank, for instance DFCC and the rural
banks. Therefore, this is our 10th year as a bank. Sanasa is owned and
introduced by the rural poor.
There are two ways in which banks are established. One way is through
the State. For example, the National Savings Bank. The other way is for
the rich of the country to establish banks. Numerous companies and
persons mobilize their capital and establish these banks. Under normal
circumstances, the poor cannot establish a bank.
The poor do not possess share capital. So, we a small group, got
together, put our resources together and established this bank. This is
the first occasion on which the poor, such as farmers, artisans,
peasants, school teachers etc, founded a bank.
We contributed Rs. 112 million as our share capital and launched the
bank. Our main mandate is to mobilize whatever money is available at the
What other banks do, essentially, is that they mobilize money and
invest in the city, and this is used for import and export and other
purposes. We, on the other hand, mobilize money in the city areas from
among the rich and transfer it to the rural areas.
Q: Any particular enterprises which you encourage?
A: We provide loans for value-added production. For example,
modernization of home gardens, farms and livestock. The loan quantum is
greater for such value-addition. We also provide loans for cultivation.
The focus here is on crops which could be exported or marketed outside
Then we identify skilled people who have entrepreneurship. We provide
money for such people to get more training and more investment. We also
introduce some projects - that is, project lending. The targeted group
in the latter is also those who possess skills and entrepreneurship.
Sanasa Bank's total credit portfolio is around Rs. 3.5 billion. That
is entirely our own savings. This we invest in the rural areas. Money
mobilized in developed areas of the country, such as Gampaha, Galle,
Kalutara and Colombo we invest in the poorer areas of the country, such
as, Monaragala, Matale and Badulla.
Q: How do you mobilize moneys in the urban areas ?
A: In urban areas we appeal to the people. We tell them that
if they are supportive of national development they should invest with
us. We dram their attention to the beneficial ways in which their money
is being invested by Sanasa.
We tell them if they are interested in developing the country they
should invest with us because their money is going to the needy people.
We are having a very good response from people who genuinely care about
the country's development and whose heart is with Sri Lanka. For a small
bank we have mobilized a huge sum of money.
Then our primary societies at the village level with excess money
deposit such money with us. These are called group savings. The interest
rate for such group savings is high.
Farmers groups, womens groups and Death Donation Societies are such
groups who invest with us.
Q: Do you operate all over Sri Lanka?
A: Oh yes, even in Jaffna. In Jaffna district we have 167,
very active societies. Even in Kilinochchi we run our societies.
We even extend to Mullaitivu and Mannar. We don't discriminate
against any community. In the Eastern Province we are operative in
Pottuvil, Kalmunai and Trincomalee. So vast is our reach.
Q: What is your experience in loan recovery?
A: Very good. Our past dues are less than four percent. That
means our loan recovery is excellent.