LOLC ventures into microfinance

Ramani Kangaraarachchi

Lanka ORIX Leasing Company PLC (LOLC), signed an agreement with the Dutch Development Bank FMO in Netherlands to launch LOLC Micro Finance Company Ltd.

Chairperson LOLC Rohini Nanayakkara Senior Investment Officer FMO Arno de Vette and Deputy Chairman Ishara Nannayakkara. Picture by Saliya Rupasinghe

They hope to provide a package of equity convertible loans and senior loans of in total US$ 10 million, Chairperson LOLC Rohini Nanayakkara told a press conference held at the Trans Asia Hotel, Colombo yesterday.

This is a landmark event in the history of the Sri Lankan finance industry as it is the first time that a private sector local micro finance entity is set up with foreign equity,” she said.

Senior Investment Officer of FMO Arno de Vette said the FMO will be 20 per cent shareholder and Lanka Orix will have 80 per cent of the shares and it will provide capacity development to upgrade staff products and systems. He said under the new micro finance company clients will specially be active in the rural sector, small loans to finance agricultural equipment, renewable energy products like solar panels and bio gas installations in the future.

“We are delighted to team up with Lanka Orix and we are convinced that the number of clients will grow fast” he said. Micro Finance is access to finance for people who have no access to finance right now and this business is very potential according to Vette.

Chief Executive Officer LOLC, Ravi Tissera said the poor people in conflict areas such as Batticaloa, Kalmunai and Trincomalee also will benefit by this new venture.

He said LOLC firmly believes that the launch of this entity will mark the dawn of a new era for the microfinance industry of Sri Lanka and hoped that this partnership will greatly benefit the rural community.”

The Netherlands Development Finance Company (FMO) is the international development bank of the Netherlands and they invest risk capital in companies and financial institutions in developing countries. FMO’s investment portfolio is about EURO 3.4 billion and it is one of the largest bilateral development banks worldwide.

FMO is able to take risks which commercial financiers not yet prepared to take risks due to their strong relationship with the Dutch Government.