Govt to provide working capital loan scheme for tea factories

11 August 2015 06:30 pm Views - 2426

The government has decided to provide a concessionary loan scheme on a short-term basis for registered tea factory owners with a view to enabling them to meet their obligations to tea smallholders on account of green leaf supplied to them.

The Sri Lanka Tea Board will identify the registered tea factory owners who will qualify for consideration by commercial and development banks for such assistance.

Lending institutions will process the loan application of borrowers after receiving the specific recommendations from the Sri Lanka Tea Board and confirm the eligibility of the borrowers for the loan facility.

The Sub Committee on Economic Development Activities met recently under the patronage of Prime Minister Ranil Wickremesinghe. This committee decided to approve this package for the development of the tea sector in our country.

The government will provide an interest subsidy of 2 percent to banks through the Regional Development Department of the Central Bank of Sri Lanka. This 2 percent interest subsidy would be made available only for a two-year period for the eligible applicants of the loan under the scheme.

The quantum of the loan will depend on the registered tea manufacture’s/factory’s average turnover of the first quarter of 2015 (January 1 to March 2015). The repayment should be within a maximum period of two years, commencing from the first charge on sales proceeds. Repayment instalments will be capital plus interest. The existing mortgages or any other security available with the respective bank in respect to the factories are to be extended to cover these loans.

The relevant circular has already been issued by the Sri Lanka Tea Board. The Subcommittee on Economic Development said this decision was taken by them to develop and encourage the small tea industry in Sri Lanka. The price of tea in the world tea market is gradually increasing these days. Therefore, this decision is very advantageous for our tea sector development.

This loan scheme has been approved by the Financial Board of the Central Bank of Sri Lanka.