The Commercial Bank of Ceylon has entered into an agreement with the International Finance Corporation (IFC) to build a Supply Chain Financing (SCF) strategy that will enable the Bank to lend more to Small and Medium Enterprises (SMEs) and establish itself as a leading SCF bank in Sri Lanka.
IFC has identified Commercial Bank as a strategic banking institution in Sri Lanka to take the position as a leading SCF bank, given its prominent presence in corporate and business banking and its strategically diversified branch network. Commercial Bank is also the largest lender to the country’s SMEs.
SMEs comprise over 75 percent of enterprises in Sri Lanka and account for 45 percent of employment and 52 percent of the country’s GDP. However, access to finance is considered a key challenge many SMEs face, hindering their growth potential. This latest partnership with IFC will facilitate lending to these enterprises, including those owned by women, a Bank spokesman said.
Commercial Bank Managing Director/CEO Sanath Manatunge said, “Although domestic and cross-border supply chain finance is considered a vital opportunity for Sri Lankan financial institutions, it is at an underdeveloped stage.
“The limited capacity of banks and heavy reliance on collateral–based lending are among the key factors which have impacted the growth of SME businesses,” he said.
IFC Country Manager for Sri Lanka and the Maldives, Alejandro Alvarez de la Campa said: “Small businesses are an engine of growth in Sri Lanka, creating jobs and driving economic growth. Despite their significance, they often struggle to obtain the much-needed working capital for the businesses to survive and thrive. As a longstanding partner of IFC, we have worked alongside Commercial Bank of Ceylon over the years to ramp up access to finance for businesses. This latest partnership will help the Bank strengthen its supply chain financing, enabling it to serve more small businesses and improve their linkages to formal supply chains, paving the way for a better future for SMEs.”
