In a bid to bolster the agricultural sector, Sri Lanka has initiated a groundbreaking pledge loan scheme, allocating 9 billion rupees at a subsidised concessional interest rate for small and medium-sized enterprises (SMEs) engaged in paddy milling, storage, and collection. Launched on February 1, 2024, this initiative aims to ensure a fair and reasonable price for farmers during the Maha Season 2023-2024.
Targeting SME paddy millers with a daily milling capacity of up to 25 metric tons, paddy storage owners with ample storage space, and paddy collectors with valid lease agreements or storage capacity, the scheme seeks to support those with a valid business registration obtained from a relevant government institution.
Applicants can secure loans at an effective interest rate of 15 percent per annum, with a maximum loan amount of 50 million rupees for SME paddy millers and 25 million rupees for paddy storage owners and collectors. Out of this interest rate, borrowers bear 11 percent, benefiting from a 4 percent interest subsidy. Repayment is expected within 180 days.
Leading banks, including Bank of Ceylon, People’s Bank, Regional Development Bank, Commercial Bank of Ceylon PLC, DFCC Bank Ltd, National Development Bank PLC, Hatton National Bank PLC, Sampath Bank Ltd, Sansa Development Bank Ltd, and Seylan Bank PLC, will facilitate the disbursement of the 9,000 million rupees allocated for these pledge loans.
In conjunction with this initiative, plans are underway to purchase paddy at a minimum purchase price declared by the Department of Agriculture. For the Maha season 2023-2024, the minimum purchase price of paddy varies according to type, with standard rates outlined for Nadu, Samba, and Keeri Samba varieties.
This concessionary loan scheme, endorsed by the cabinet of ministers on January 29, is slated for implementation from February 1 to April 30, 2024. The comprehensive approach, spanning financial support and a commitment to fair pricing, underscores Sri Lanka’s dedication to empowering SMEs in the crucial paddy sector, fostering sustainability and economic resilience.