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

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Introduction and Approach A district-by-district activity survey was undertaken in order to gain an understanding of the actual levels of microfinance supply throughout the country. To achieve this the major microfinance practitioners were approached and asked to provide information of their savings and loans activities as of the 31 st of December 2000. This included Banks, INGOs, Government microfinance programmes and the not-for profit sector. In the event, the majority of the commercial banking sector do not engage in microfinance activities or were unwilling or unable to supply the level of information required and the commercial banking sector was omitted from the survey. Other formal financial institutions that practice microfinance such as the Regional Development Banks and Samurdhi are included. A number of specific microfinance schemes had to be omitted. The Change Agent Programme for example was not able to track year on year growth and could not provide non-cumulative loan information. Other projects left out include, The Ministry of Plan Implementation Regional Development Projects, The CSBL, SFLCP, PAMP and REAP, the latter two of which were not operational in the year 2000. Of the Regional Development Projects the most successful was in Hambantota this was spun off into the Social Mobilisation Foundation and is included in the survey. The second Badulla IRDP has disbursed some SLR 25 million, the others have all largely finished and either had no micro credit component or the micro credit component was largely unsuccessful. CBSL funded projects have been picked up through the practitioner activity of the programmes participating agencies. The SFLCP disbursed a total of some SLR 739 million through participating agencies and to avoid overlap the project is not directly included in the study as the funds were disbursed through participating agencies that are included. Unfortunately, the TCCS and Samurdhi organisations were not in a position to provide information on the numbers of individual savings accounts. They were, however, able to give information on overall volumes of savings activity and the number and volumes of loans for the period required and have been included in the survey. In terms of representation the survey identified a total of SLR 14.4 billion disbursed during the year 2000. The combined totals of the active credit components omitted from the study approximate SLR 100 million or less than 1 percent of the total. The microfinance loan activity of the BoC, Peoples Bank, HNB and the Seylan Bank amounts to approximately SLR 4.2 billion total outstanding loans as at 31st Dec 2000. Not accounting for the difference between loans disbursed and total cumulative outstanding loans, the combined total of the commercial banking sector and other microfinance activity omitted from the study is estimated at some SLR 4.3 billion.
The total of SLR 14.4 billion identified in the survey added to the estimated total omitted from the survey of SLR 4.3 billion equals SLR 18.7 billion. This represents some 77 percent of known microfinance activity during the year 2000. The local NGO survey identified that local NGOs represent approximately 2.2% of national microfinance activity. The study as a whole identified a total of 141 NGOs who claim to be practising microfinance nation wide. Given that the survey targeted local NGOs with the largest savings and loan portfolios, it is unlikely that the NGOs not included in the survey reduce the surveys overall representation to less than percent. The operating environment in the North and East region is highly differentiated from the rest of the country and localised within the region. The information gathered for this survey was gained from a combination of field visits to Batticaloa, Trincomalee, Vavuniya, Jaffna and the Wanni area, this was complimented with information given by International Agencies, INGOs, Multilateral Agencies, GoSL, Banks and NGOs. Samurdhi, the Regional Development Banks, the GoSL implemented microfinance projects and the CBSL implemented microfinance schemes were not present throughout the region during the period of this survey. The survey was unable to obtain data on the microfinance activities of the commercial banking sector at the district level from the Head Offices in Colombo or from local branches within the districts. There is some activity in the banking sector, mainly savings and current accounts with loans being highly collateralised and demand outstripping supply. During 1999 - 2000, the protagonists were in open conflict. The security forces were driven out of the Wanni area down to the present FDL at Vavuniya and lost Elephant Pass along with one third of the Jaffna Peninsula. During this time the population in these areas were largely displaced and savings and credit activities were severely disrupted. Information on the TCCS activity for the North and East region in this survey was provided by the TCCS district offices in Jaffna, Vavuniya and Kilinochchi by the Government Agent Offices in Mannar, Batticaloa and Trincomalee and assistance from the UNDP. The TCCS figures given in this survey differ from the estimates provided by the TCCS Federation in Colombo, as they are based on local information and not estimates based on national averages. Many TCCSs became inactive and many remain so to this day. The events of 1999 - 2000 combined with the continuing conflict has meant that the cooperative movement in the North and East region has been severely disrupted. For example, during the early eighties the TCCS in Jaffna had 534 operating branches. This number had been reduced to 180 by December 2000. The accumulative loan portfolio for this district as of December 2000 was SLR 35.6 million with the non-performing portion being SLR 18 million or over 50% of the total. The TCCS district office reports that they had no data available for the survey as loan activity had been virtually suspended throughout the peninsula during that time and there was no reliable information on savings.
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National Microfinance Study of Sri
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(b) Lenders .......................
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Introduction into the pawning busin
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Microfinance Overview .............
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Savings ...........................
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List of Tables Table 1 Microfinance
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Table 70 Ratnapura District Microfi
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JBIC MFI MFN MIS MPCS MSME NCPPDP N
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Figure 1 Map of per Capita Value of
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Figure 3 Map of per Capita Value of
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Executive Summary This report provi
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Practitioner Microfinance Activity
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As a result the banks are moving aw
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The operating conditions of the con
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Donor Strategies There should be a
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Introduction to the Study The objec
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The survey does not claim to repres
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Introduction Socio-Economic Overvie
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These five years saw a spate of new
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The 'Economic Stream' Employment is
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Microfinance Clients and Beneficiar
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1. Funders of Microfinance in Sri L
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CIDA believes that microfinance act
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The Department For International De
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NOVIB Partnerships tend to be long
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HIVOS The HIVOS Desk concentrates o
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Over time SIDA noted that the loan
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Comment freely given from one of th
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the time period of the project, wit
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Only a very small part of the US 50
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The demand for loans from this fund
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Without permanent access to institu
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This broad strategy means that the
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Beneficiary targeting was generally
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The FCSs were developed the followi
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CARE's new strategy commits the org
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Each CBO determines the level of in
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The project’s overall approach re
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Figure 6 GTZ/JRP - Project Interact
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The Social Development Foundation F
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There are no sector-based quotas ap
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Over the past five years SCN has as
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UNDP in the North & East - The Jaff
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In December 2001 a new UNDP Program
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From previous experience and lesson
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World Vision Lanka WVL believes tha
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Membership Development 3500 3000 25
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Table 14 World Vision - Gramashakth
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ZOA works with community groups in
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At the village society and bank lev
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In Wayamba the sustainability of th
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Table 15 Badulla IRDP - Summary Dat
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DZPDP/WHRDA credit operations comme
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In the initial years they did not f
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Table 18 SPRDP- Loans 1993 to 1999
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(c)Lender-Practitioners The Central
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Society members have access to cred
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The RDBs were re-structured in 1998
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Table 25 Value of Loans Disbursed b
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The total savings and credit issued
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Table 29 Samurdhi - Loans by Distri
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In 1998 SEEDS converted to a separa
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Within the loans from SEEDS funds t
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The Arthacharya Foundation practice
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The program was assisted by some li
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However in general the majority of
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Table 33 Growth of MPCS CRBs -1990
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As at the end of December, 2000 a s
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Some 1,176 of the 1,476 Co-operativ
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A total of 74 NGOs were identified
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Finally only a small proportion of
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Table 38 TCCS Active Societies and
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District Unions - National Federati
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4. Facilitators a) National Level F
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International Centre for the Traini
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Funder-Practitioner Microfinance Ac
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As practitioner experience increase
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Introduction and Approach The major
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State-Owned Banks The Bank of Ceylo
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Starting in 1994, the NCRCS is aime
Page 162 and 163: The Seylan Bank The Seylan Bank ent
Page 164 and 165: Figure 9 Linking of the RBIP Tools
Page 166 and 167: People's Fast reduces loan processi
Page 168 and 169: In addition, RBIP monitors the impl
Page 170 and 171: The Hatton National Bank Case Study
Page 172 and 173: Seylan Bank Case Study The Seylan B
Page 174 and 175: Until 1961 private pawnbrokers were
Page 176 and 177: Bank officials stated that PSC staf
Page 178 and 179: The urban PSCs have on average more
Page 180 and 181: The lack of flexibility has induced
Page 182 and 183: From the borrowers perspective not
Page 184 and 185: The Peoples Bank, on the other hand
Page 186 and 187: Introduction and Approach Internati
Page 188 and 189: Displaced populations are dependent
Page 190 and 191: Large tracts of land have become to
Page 192 and 193: Public markets, shops, guest houses
Page 194 and 195: The previous thriving local economy
Page 196 and 197: The Wanni Access to the area known
Page 198 and 199: Remembering that these intervention
Page 200 and 201: This type of situation is seen thro
Page 202 and 203: People IDPs in welfare centres, sho
Page 204 and 205: World Vision has been working in al
Page 206 and 207: small entrepreneurs have received t
Page 208 and 209: The exception to this is a governme
Page 210 and 211: There has been some continued acces
Page 214 and 215: The MPCSs were equally disrupted an
Page 216 and 217: The main body of the survey is pres
Page 218 and 219: Local NGOs 11 NGOs were identified
Page 220 and 221: Local NGOs 1 NGO was identified in
Page 222 and 223: Local NGOs 1 NGO was identified in
Page 224 and 225: Local NGOs 2 NGOs were identified i
Page 226 and 227: Local NGOs No NGOs were identified
Page 228 and 229: Gampaha District Microfinance Overv
Page 230 and 231: Hambantota District Microfinance Ov
Page 232 and 233: Jaffna District Microfinance Overvi
Page 234 and 235: Staring in 1998 each DS received SL
Page 244 and 245: Matale District Microfinance Overvi
Page 246 and 247: Matara District Microfinance Overvi
Page 248 and 249: Moneragala District Microfinance Ov
Page 250 and 251: Nuwara Eliya District Microfinance
Page 252 and 253: Polonnaruwa District Microfinance O
Page 254 and 255: Puttalam District Microfinance Over
Page 256 and 257: Ratnapura District Microfinance Ove
Page 258 and 259: Trincomalee District Microfinance O
Page 260 and 261: Vavuniya district Microfinance Over
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The Wanni Area Microfinance Overvie
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Summary Microfinance Activity by Ac
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The NGO questionnaire survey identi
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World Vision Lanka works in 5 distr
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Given that these figures do not inc
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Overall, 13 of districts had levels
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Averages Value of Loans Table 78 Av
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Volume and Number of Loans The surv
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Findings The key and main findings
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Service Providers The service provi
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those incapacitated by conflict, wi
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Cultures of Dependency in Microfina
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Strategic Recommendations The key s
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Conclusion The study found that the
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Charitoneko, S. and D de Silva (200
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Remenyi, J (1991). Where Credit is
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Technical Appendix
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