German aid for injecting more cash into Jaffna economy

[TamilNet, Monday, 19 May 2003, 10:20 GMT]
The Sri Lankan state run the People’s Bank has launched a programme to make ready cash available to entrepreneurs in the Northern Province with the assistance of German government-supported Rural Banking Innovations Project (RBIP), a press note by German Technical Cooperation (GTZ) Monday. Speaking about the project, Mr. Sivapathaviruthayar, Regional Manager of the People’s Bank Jaffna, said: “We all know what the entrepreneurs in Jaffna need most is money to set up their business."

People’s Bank conducted a training workshop in May for the staff of the bank’s Jaffna branch to sensitize them and to upgrade their capability to approach Jaffna.

“This sort of training to our staff will enable them to mobilize more cash within the business community, which in turn will see a resurgence of economic activity in Jaffna,” he added.

“During the workshop, participants learnt how to use networks to find customers and information about them. They also learnt details about “People’s Fast,” a commercial tailor-made micro loan product introduced by RBIP," the GTZ press note said.

“The Rural Banking Innovations Project, a cooperation between the People’s Bank of Sri Lanka and the German Technical Cooperation (GTZ) on behalf of the German Ministry for Economic Cooperation and Development (BMZ), was established in 1996 to support the Bank to re-orient itself towards commercial lending activities for micro, small and medium enterprises (MSME)," according to the press note.

“Very soon we will start to visit our clients," said Mr. G. Satkunabalan, Kayts Branch Manager of the People’s Bank Jaffna.

“The People’s Bank, with the consultative support of the RBIP, will take the lead, in providing commercial credit facilities for start-ups, expansion of businesses and investments. This will help a lot of potential enterprises to set up their business," he said.

According to Mr. Armin Hofmann, Principal Adviser of the RBIP, commercial mircofinance is most suitable to enhance economic development because it creates employment. This, according to the GTZ press note, “also contributes to the promotion of economic diversity especially within the north and east. This approach follows the strategy developed by the Government of Sri Lanka highlighted in its programmes such as ‘Regaining Sri Lanka’ and ‘Connecting to Growth.’ "

The press note further said: “RBIP’s target is to improve the access of MSME to formal financial services on a cost-covering basis for the bank’s branches. Key determinants of the minimal loan disbursement to MSME are the high transaction costs at bank’s as well as customer side. Lowering the transaction costs on both sides therefore is the solution for a customer oriented and financially viable loan disbursement for MSME. RBIP focuses on training and advisory support to the People’s Bank to develop demand-oriented financial services and to generate improved provision of financial services to target groups."