COLOMBO, SRI LANKA - The Asian Development Bank (ADB) and LOMC, one of Sri Lanka's leading non-bank microfinance institutions, today signed a $25 million loan agreement to boost access to credit for individuals and micro enterprises.
'Greater financial inclusion is of critical importance for Sri Lanka to increase economic opportunities and job creation,' said Monisha Hermans, Investment Specialist with ADB's Private Sector Operations Department. 'This loan will enable LOLC Micro Credit, the fastest-growing microfinance institution in the country, to better target the needs of individuals and micro enterprises that exhibit growth potential.'
Under the terms of the agreement signed by Ms. Hermans and LOMC CEO Ravi Tissera, LOMC will use the funds for onlending to individuals and microbusinesses. The loan will also help LOMC improve financial products and increase outreach to remote villages and farmers. Mobile banking will be further developed to serve the unbanked especially in rural areas, and financial literacy programs will be introduced to improve reach and address over indebtedness of household borrowers.
Although Sri Lanka has a large number of banks and nonbank financial institutions, financial inclusion remains low and an estimated 70% of the population does not have access to any banking services or micro credits. Nonbank financing institutions in Sri Lanka typically find it difficult to source long term funds for their needs, so ADB's 5 year tenor loan provides a valuable source of finance for LOMC to serve the unbanked population and micro enterprises.
The $25 million loan signing comes three weeks after ADB and LOLC Finance, which together with LOMC is part of the LOLC Group, sealed another agreement for additional loans worth a total $69 million to help expand funding for small- and medium-sized enterprises in Sri Lanka.
Alpen Capital ME Limited acted as the financial arranger for the B-loan tranche from Middle Eastern banks in Dubai, United Arab Emirates.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members - 48 from the region.