LOLC gets US $ 3 m credit guarantee loan

USAID in tie up to finance rural poor:

Hiran H. Senewiratne

FINANCE: The Lanka Orix Leasing Company Limited (LOLC) has obtained a partial credit guarantee loan of US $ 3 million from USAID to assist the local micro finance sector.

"The reason for the company to obtain a guarantee loan from USAID was its transparency towards the micro finance sector from the very beginning from 2003," Head of Corporate and Customer Relations Gayani de Silva said.

She said USAID encouraged them to delve more deeply into micro financing areas including the dairy industry, agriculture, fisheries, skill-enabled loans and renewable energy, where there was an inherent risk of capital loss.

This credit guarantee scheme is the first time in the world the USAID has committed to a company and is a great honour to LOLC, she said. LOLC is also working closely with the International Finance Corporation of the World Bank.

These micro financial loans will be between Rs. 10,000 to Rs. 20,000, which they are planning to reach out to grassroot level via their country- wide branch network. All their micro financial operations are rural based to uplift the living standard of the livelihood of the rural poor to contribute towards achieving sustainable development in the country, De Silva said.

The company has not yet budgeted how much money they are going to allocate on the Micro Finance business in the coming year. They will assess the repayment capabilities of their customers before awarding the loan,' she said.

According to De Silva, they began Micro Finance within the ambit of the Renewable Energy for Rural Development in 2003 to provide a viable source of energy for rural electrification purposes.

LOLC has launched novel projects to provide micro finance for agro development especially for importing cattle and financing livestock development and other agro related sectors, she said.

LOLC performed extremely well during the last year, won a special award for outstanding performance from among the global ORIX network.

The Group achieved a profit of Rs. one billion before tax, a growth of 41 per cent over last year. LOLC becomes liable for tax first time and a provision of Rs. 270 million is made as tax liability.

Considering the effect of the recognition of the deferred tax asset, the Group profits after tax was Rs. 1.05 billion.

LOLC initially started as a leasing company and has diversified into full financial service provider.

LOLC is the third joint venture of ORIX with the International Finance Corporation.

Today, ORIX Corporation is the single largest leasing Company in the world and the second largest financial solution provider in Japan and has a global network of 187 consolidated subsidiaries and 82 affiliated throughout 23 countries and regions worldwide.