Microfinance Industry Report SRI LANKA - Microfinance in Sri Lanka

Annex 3: Profile of Microfinance
Institutional Types
>> Regional Development Banks and other
licensed specialized banks – There are 6 RDBs
(Kandurata, Rajarata, Ruhuna, Sabaragamuwa,
Uva and Wayamba) each covering a geographical
region of the country. The Northern Province
and part of the Eastern Province are not covered.
Government owned, the RDBs cater to the higher
end of the microfinance market and the SME
sector. Sanasa Development Bank is the only
other licensed specialized bank with a focus on
microfinance. Owned by the Sanasa Thrift and
Credit Co-operatives (TCCSs), it serves as the apex
bank for the Sanasa system and also engages in
direct retail level activities.
>> Co-operative Rural Banks (CRBs) and other cooperatives
– There are over 1,600 CRBs owned
by the Multi-Purpose Cooperative Societies. In
addition, there are other co-operatives which
engage in microfinance, notably the Women’s
Development Co-operatives. All these are member
owned societies registered with, and supervised
by, the Department of Co-operative Development.
Despite having a large deposit base (they are
permitted to accept member deposits), their
lending activity is relatively low (Rs. 32 Bn deposit
base and corresponding loan portfolio of Rs. 22 Bn
in 2007). Profits earned by well-performing CBRs
are used to subsidize the losses of their parent
MPCS.
>> Thrift and Credit Co-operative Societies (TCCSs/
Sanasa societies) – The TCCSs are the oldest
microfinance providers in the country. They were
re-organized into a federation under the Sanasa
banner during the late 1970s. However, most
TCCSs in the North remain independent of the
Sanasa movement and have their own federation.
Both Sanasa and non-Sanasa TCCSs are registered
with, and supervised by, the Department of
Co-operative Development. The Sanasa TCCSs
advance loans largely from mobilized savings but
also have access to credit facilities from the Sanasa
Development Bank. The Sanasa TCCSs have shown
stagnant or declining performance over the past
5 years and a programme to strengthen and
modernize the societies is currently underway.
> > Samurdhi Bank Societies (SBSs) – Samurdhi Bank
Societies (SBSs) were established in 1996 as part of
the National Samurdhi Programme, a wide-ranging
governmental poverty alleviation programme
targeting youth, women and the disadvantaged.
The SBSs target the very low income population
(defined as households having an income of less
than Rs. 1,500 a month). The SBSs are essentially
self-supervised. The Central Bank has cited the
risks of SBSs mobilising large volumes of savings
without proper regulation and supervision.
The SBSs have outlets throughout the country,
including the conflict affected Northern Province.
However, heavy subsidizing by the government
and political interference in the Samurdhi system
have resulted in wide-spread inefficiencies which
cast doubts on their ability to be sustainable
without government support.
36 microfinance industry report - SRI LANKA