A media briefing was held on the innovative process adopted by the Asian Development Bank regarding an agreed loan granted to Sri Lanka.
The ADB says funds will be released in June and fifty percent of the funds will be allocated to SMEs out of Colombo, companies with uncolatorised working capital, SMEs led by women and new SME clients.
Senior Financial Specialist of Asian Development Bank, Donald Lambert stated that they will allocate funds for the first time for participating financial institutions via an auction. He added that the purpose of the auction is to maintain a market-based rate for lending to high impact development SME clients.
Explaining further, he noted that the funding promoted economic efficiency and financial institutions in order to make sure the money moves. Furthermore, he added that their interest to the government is LIVO +50 basis points,the lending rate to the banks is whatever they bid it on, as the banks have to pay the interest.
Therefore, it is clearly lining their financial incentives. to make sure that they are only bidding on amounts that they can disperse with reasonable confidence.