New Credit Evaluation Framework to enable banks to boost lending to tech firms

From left: Paymedia (Pvt.) Ltd Founder/CEO Kanishka Weeramunda, PwC Sri Lanka Director Deals Kavinda Weerakoon, NDB Bank Vice President SME, Middle Market and Business Banking Indika Ranaweera, ICTA Chairman Prof. Lalith Gamage, ICTA Chief Executive Officer Mahinda B. Herath, DFCC Bank Chief Risk Officer Ashok Goonesekere, ICTA Chief Digital Economy Officer Anura De Alwis and ICTA Director Start-up Ecosystem Development Sachindra Samararathne

The Information and Communication Technology Agency (ICTA) expects the banking sector to boost lending to worthy tech companies by adopting the recently introduced Credit Evaluation Framework in their credit evaluation and approval process, when lending to tech companies and moving away from the outdated collateral-based lending practices.

The new Credit Evaluation Framework was developed by the ICTA in collaboration with PwC Sri Lanka.
As often start-ups are faced with constraints in accessing bank financing due to lack of collateral, it continues to undermine the innovation drive of the country.

The tech firms continue to remain underserved by banks, due to the deficiencies in the existing generic credit evaluation frameworks in evaluating the merits and demerits of a tech company.

“It is vital to extend financial support for the growth of these tech companies, also considering their huge export capacity.

This alternative credit evaluation process will enable tech companies to access funding without the need to rely on personal collateral,” ICTA Chairman Prof. Lalith Gamage told reporters in an online press conference yesterday. 
The ICTA targets to achieve US $ 3 billion ICT exports by 2024, by creating the ecosystem for 750 tech companies, 1000 IT and IT-infused start-ups and 500 other technology start-ups to setup and grow. 

The Credit Evaluation Framework was built around dour pillars, which includes Founder, Market, Product and Financials and has thus provided technology companies to be evaluated on quantitative and qualitative factors that are most relevant to them.

The ICTA revealed that Seylan Bank, DFCC Bank, Union Bank and NDB bank have already expressed their willingness to consider the new framework when assessing technology companies for debt financing.

The framework has been formulated with the due support and consultation from an industry-leading steering committee, which consisted of Calcey Technologies (Pvt.) Ltd CEO Mangala Karunaratne, Lankan Angel Network CEO,  NDB Investment Bank Limited Chief Corporate Advisory Officer Nilendra Weerasinghe and Cemex Software (Pvt.) Ltd  Director Jayomi Lokuliyana and ZMessenger (Pvt.) Ltd CEO Wellington Perera.

Further, the framework has been designed with the recommendations of credit evaluation officers from several banks in order to streamline the mechanism further.

“We are optimistic that this framework will act as a catalyst for lending institutions to provide flexible and innovative financing facilities to develop high-impact technology-driven sectors of the economy,” PwC Sri Lanka Director Kavinda Weerakoon remarked.