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Sustainable financial services for SMEs in Sri Lanka

The economic situation of South Asian island state Sri Lanka has proved to be increasingly robust since the end of the civil war that lasted for decades. Although Sri Lanka was only ranked 99 out of 185 in the World Bank’s "Doing Business Index" in 2015, its outlook is a generally positive one, with 80 percent of Gross Domestic Product being generated by private industry.

In order to be able to develop, local small and medium-sized enterprises (SMEs) in Sri Lanka need reliable access to long-term loans. Accordingly, DEG provided the Hatton National Bank with a long-term loan in September 2015 for the purposes of making capital available to local SME customers. The commercial bank has been a customer of DEG’s for three years and, with the help of this second DEG loan, is now in a position to expand its range of services for SMEs.

However, the scope of the working relationship between DEG and HNB extends well beyond this. The bank, which is committed to sustainability, spearheaded a nationwide initiative – co-financed by DEG – of the Sri Lanka Banks’ Association in 2015 with a view to establishing environmental and social management systems in Sri Lanka’s financial institutes. In this connection, a working group consisting of representatives from various banks drew up eleven "sustainable banking principles" to be applied throughout the country.

production hall
Medium-sized company "Mega Heaters" in Kottawa benefits from the financing provided by the Hatton Bank.