National Microfinance Study of Sri Lanka: Survey of Practices and ...

Seylan Bank Case Study
The Seylan Bank was one of the 15 banks in Asia to win the prestigious Asian
Banks Award. Of the 16 outstanding projects chosen for an award was Seylan
Bank’s, Govisarupatha, the credit card for farmers is an innovative solutions
driven approach in conceptualising and implementing a credit facility.
Govisarupatha won the award in the category Micro Credit Project or Programme
and was developed in 2000 to meet the needs of low-income families in the
agricultural sector.
In 1996 the Seylan Bank initiated a new credit scheme for farmers that assisted
them to overcome their major problems concerning the access to credit on time to
purchase inputs for the production of crops within the ‘seasonal boundaries’.
This was done through becoming client focused, with the bank staff meeting
farmers and assessing their needs, listening to the problems that were being
experienced within the farming communities.
The bank encouraged the development of small groups of between 5 and 8
farmers, in the main these groups were not new but had been previously formed
through social mobilisation programmes that had become inactive, undertaken by
international and national organisations.
These groups are all based in eight districts; Ampara, Anuradhapura, Badulla,
Hambantota, Kurunegala, Moneragala, Polonnaruwa and Ratnapura, and were
revitalized through a series of awareness and training programmes.
This mobilisation process included gathering information on the farmers and their
families and the overall problems that kept them heavily indebted and unable to
break out of the ‘poverty trap’. The bank identified that one of the main reasons
for general indebtedness was the complex process and long period of time taken
to approve loans for production inputs. Often by the time the loan was approved
and the credit used the farmers had missed the optimum time for planting the
crops resulting in poor and often failed crop harvests.
The bank set up a fast credit approach for the groups whereby all group members
credit details were taken once and from that time loans were approved in a
maximum of 14 days from application. This new approach gained momentum
from 1998 onwards and the groups in the Hambantota and Polonnaruwa Districts
formed registered apex organisations registered as private companies. These
companies are able to access credit for other purchases, gain better prices for
production inputs and give forward purchasing contracts for the member farmers
harvests.
The Govisarupatha credit card system initiated in 2000 for the two apex
organisation’s members enables farmers to purchase their basic day- to-day
supplies such as seed, fertilizer and pesticides without having to access a ‘one
time’ loan from the bank.
The farmer does not have to go to the bank for a loan and gets automatic
rescheduling of the credit taken in the case of natural calamity such as the recent
drought experienced in the Hambantota District. The credit comes with both a
life insurance policy and hospitalisation benefits in case of illness or injury.