IFC, Com Bank in US $ 65 m facility for SMEs

The International Finance Corporation (IFC), a member of the World Bank Group, has extended a seven-year, US$ 65 million (Rs 7.4 billion) financing facility to the Commercial Bank of Ceylon PLC to expand the latter’s lending to Small and Medium Enterprises (SME).

IFC’s largest financial markets investment in Sri Lanka to date, the facility is also the first future flow-backed financing done for a bank in South Asia, and is expected to help about 20,000 small businesses, create improved economic conditions that reduce poverty, and improve access to credit in undeserved areas, including the north and east of Sri Lanka.

The milestone financing agreement was signed in Colombo last week with IFC Vice President - Asia Pacific Karin Finkelston and Commercial Bank Managing Director Amitha Gooneratne as principal signatories.

Commercial Bank Managing Director Amitha Gooneratne said the US$ 65 million facility would not only improve the bank’s operations, it would also be very beneficial to the country and serve as a catalyst for other financial institutions to structure similar facilities.

Thanking the IFC for providing this innovative structure, he noted that Commercial Bank had established a strong relationship with IFC from the time of its first investment in the Bank in 2003.

“The need of the country in the post-conflict period is to have development flowing through to all provinces,” Gooneratne added.

“The national budget for 2012 places emphasis on the development of the SME sector and there are special concessions for banks that engage in SME lending.”

Asia Pacific IFC Vice President Karin Finkelston said: “At IFC, we are constantly working to provide innovative ideas which support private sector development. This project with Commercial Bank fits perfectly into our strategic agenda towards fostering SME growth and financial inclusion. As the first future flow backed project for us in Asia, we hope to replicate this structure elsewhere.”