Oct 25, Colombo: In an unparalleled effort to support the backbone of Sri Lanka’s tea production industry, Seylan Bank, the Bank with a Heart, has become one of the Participating Financial Institutions in a scheme introduced by the Asian Development Bank (ADB) and the Ministry of Finance to develop the island’s tea smallholders.
ADB, via the Project Management Unit of the Finance Ministry’s Development Finance Department (DFD) has put forward an additional financing Credit Line to fulfil this purpose. With a commitment toward unlocking the potential of Sri Lanka’s SME sector, Seylan Bank which successfully disbursed the 1st tranche of this Credit Line, recently received approvals to disburse the 2nd tranche.
It is noteworthy that among the five participating banks, Seylan Bank has been offered the largest quantum to be disbursed to tea smallholders. This positions the financial institution as one of the key transformative agents to act as a catalyst, for the growth of tea smallholders across the country.
Tea Smallholders owning less than 50 acres are eligible to borrow under the scheme for replanting, new planting, infilling, irrigating and mechanization. Tea Smallholders owning less than 10 acres are eligible to obtain a grant of 10% of the loan value for replanting and new planting only. The applicable interest rate is 7% p.a. and will be subject to a recommendation letter from Tea Small Holdings Development Authority (TSHDA).The maximum loan tenure has been set at 10 years, including a maximum grace period of 2 years depending on the purpose for which funding is provided.
According to United Nations (UN) statistics from 2021, about 75% of Sri Lanka’s tea comes from small-growers, mostly consisting of up to 10 acres of family-grown estates. This indicates that small-holding growers are the backbone of the tea industry in Sri Lanka, accounting for about 60% of the total area cultivated.
Commenting on the scheme, Ranil Dissanayake, Deputy General Manager – Branch Credit of Seylan Bank stated, “Our successful disbursement of the first tranche gave us this invaluable opportunity to receive the second tranche as well. Seylan Bank considers the SME sector as the backbone of national economy and Tea Small Holders are a key focus group. The tranche is effective for new planting as well as replanting, which extends our reach to many planters who already have their plantations and those who consider commencing tea planting. We take pride in the trust that the ADB has placed on the Bank by allocating the second tranche and enabling us to continue supporting the Tea Small Holders.”
With prospects of being the most viable financial services provider for this valuable community, Seylan Bank is hopeful that leaf production will be enhanced by using the best agricultural practices facilitated by financial gain through this loan scheme. Seylan Bank hopes to foster an environment for economic development and elevate the Tea Smallholders to the export level through the Bank’s SME export oriented initiatives.