Govt introduces Concessionary pledge loan scheme for SME paddy industry.
By: Staff Writer
February 05, Colombo (LNW): In a bid to maintain a reasonable price for farmers, a pledge loan scheme under a concessional interest rate for small and medium-scale (SME) paddy millers, paddy storage owners and paddy collectors has been implemented for purchasing paddy in Maha Season 2023/2024.
The move comes following a Cabinet decision taken on Monday and the concessionary loan scheme is implemented from 1 February to 30 April. The total value of the loans to be disbursed by the Banks is Rs. 9 billion.
Accordingly, the target group of this loan scheme includes SME paddy millers who are subject to a maximum daily paddy milling capacity of 25 tons, paddy storage owners and collectors are subject to having an adequate storage capacity or a valid lease agreement with a storage owner with a sufficient storage capacity or SME paddy miller.
Such borrowers should have a valid Business Registration obtained from a relevant Government institution.
They can get loans at the effective interest rate of 15% per annum under the maximum loan amount of Rs. 50 million per SME paddy miller and Rs. 25 million per paddy storage owner and paddy collector. Out of the effective interest rate, an 11% interest rate has to be borne by the respective borrowers and the interest subsidy is 4%. The respective loan should be repaid within 180 days.
It has been planned to provide pledge loans through the 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 under this loan scheme.
Further, it has been planned to purchase paddy at a Minimum Purchase Price of Paddy declared by the Department of Agriculture under this program. Minimum Purchase Price of paddy for Maha Season 2023/2024.
As of now the mill owners have been engaged in raising the price of paddy. Given the current drought and rainfall situation that prevail these individuals are not only attempting to raise the price of paddy, but are also trying to create the illusion of a paddy shortage.
The per capita paddy consumption in Sri Lanka is approximately 125 kg per year. However, due to last year’s economic crisis this figure decreased to 90 kg.
Nevertheless, the per capita paddy consumption has increased to 112 kg as of now. Additionally, Sri Lankans require two hundred thousand metric tons of paddy per month. Consequently, Gunaratne pointed out that 2.4 million metric tons of paddy is needed annually.