Immediate implementation of budget proposals announced

• Finance Ministry announces implementation of a range of loan schemes proposed in Budget 2021
• Announces 7% housing loans to state sector employees; Rs.0.75mn solar panel loan also announced
• Extends ‘Agrahara’ medical insurance scheme to cover COVID-19-related hospital bills and deaths of state employees
• Announces concessionary housing loan scheme to purchase housing units at projects undertaken by UDA
• Launch of ‘Kiri Shakthi’ loans up to Rs.1mn, targeting to increase country’s dairy production announced

The Finance Ministry this week announced the immediate implementation of a range of loan schemes proposed in Budget 2021, targeted at state and private sector employees, small and medium enterprises (SMEs) and dairy farmers.

In a press communiqué, the ministry on Thursday announced that the state banks have already taken measures to cap the housing and property loan interest rates for state employees at 7 percent, which would indirectly grant a Rs.2500 monthly salary increase for these state employees.  

Accordingly, the interest rates for housing and property loans for the first Rs.0.5 million would be capped at 3 percent and for a loan amounting between Rs.1 to 3 million would be capped at 7 percent. 

Further, the state employees are also granted to borrow up to Rs.0.75 million, at 4 percent interest, to install rooftop solar power generation kits. 

The loan is repayable over a 10-year period and would be disbursed through 10 state and private sector banks.
The scheme is expected to generate Rs.3000 in additional monthly income for a 5KW solar generation system, during the first seven years, after the loan instalment.

Although the government hasn’t granted any direct salary increment for state employees in Budget 2021, the ministry emphasised that the above-mentioned loan schemes would provide state employees with opportunities to earn additional incomes.  

Moreover, the government has decided to extend the ‘Agrahara’ medical insurance scheme to cover COVID-19-related hospital bills and deaths of state employees. 

Meanwhile, the ministry also announced immediate plans to launch the concessionary housing loan scheme proposed in Budget 2021 for the country’s middle class, allowing them to purchase housing units at projects undertaken by the Urban Development Authority (UDA).

Accordingly, it was noted that both state and private sector employees would be eligible to borrow up to Rs.10 million from Bank of Ceylon (BOC), People’s Bank (PB) and National Savings Bank (NSB), at a concessionary interest rate of 6.25 percent that is repayable over an extended period of 25 years.

The loan scheme is set to come into effect from January 1, next year and it’s expected to reduce traffic congestions on the road network in urban and semi-urban areas of the country. 

 In order to support the country’s SMEs to bounce back from the COVID-19-infused crisis, the ministry noted that US $ 100 million (Rs.18.6 billion) worth of funds have been released to the country’s banking sector.

These funds are expected to be disbursed to affected SMEs, as working capital loans, through selected banks.  Furthermore, the government presenting Budget 2021 also announced a new loan scheme called ‘Thrunu Diriya’, targeted at youth entrepreneurs.

The ministry stated that the loan scheme would provide start-up capital for youth-led businesses up to Rs.0.5 million, at a concessionary interest rate of 4 percent, without any requirements for collateral, based on their business proposals.  The loan scheme is to be implemented through Regional Development Bank (RDB). With an aim to save US $ 300 million exhausted in annual import expenditure, the government has announced a fresh loan scheme named ‘Kiri Shakthi’, targeting to increase the country’s dairy production by empowering the SME sector dairy farmers.

Under the proposed loan scheme, the ministry noted that the dairy farmers would be able to borrow up to Rs.1 million under concessionary terms, to fund expansions and to purchase the required capital machinery for such operations.