Private banks loan Ks 868.733 bln to SMEs

Until December, 2017, private banks have granted a Ks 319.228 billion loan to the agricultural and livestock sector and Ks 868.733 billion to small and medium-sized enterprises, said Soe Thein, Vice-governor of the Central Bank of Myanmar.

MP Kyaw Htwe representing Yangon Region Constituency-8, raised a question on the policies set for the establishment of private banks by citizens and the loan scheme for farming and SME sectors, at the session of Upper House parliament on March 14.

In replying to the question, Vice-governor Soe Thein said the central bank had no separate record of the exact percentage of loans granted to farming and SMEs sectors. This is the collection of figures from the Ministry of Planning and Finance, the Ministry of Industry, State-owned banks and private banks.

Until December, 2017, the loans granted to the agricultural and livestock sector accounts for 1.73 per cent of the total loan amounts granted to the private sector and the loans to the SMEs sector for 4.71 per cent. The private banks’ loan disbursement plan has three main sources. The JICA’s two-step loan plays a crucial role in the disbursement of loans to SMEs. Under the two-step loan scheme, the JICA loans Ks 62 billion (Japanese Yen 5.033 billion) to Myanmar Economic Bank, with a 0.01-per-cent interest rate, the 0.01annual service charge of, a 10-year grace period and a 40-year repayment period.

The MEB disburses loans to local private banks, at a four-per-cent interest rate. Then, Small and Medium Industrial Development Bank, Ayeyarwady Bank, Co-operative Bank, Myanmar Citizens Bank, Myanmar Apex Bank and Kanbawza Bank re-disburse loans to SMEs, at an 8.5 per cent interest rate. Under the JICA’s two-step loan scheme, six private banks re-disbursed Ks 61.867 billion to 297 businesses until January 2018, said the vice-governor.

Under the second two-step loan scheme, the JICA granted a Ks 185 billion (Japanese Yen 14.949 billion) loan to the MEB. Loans will be re-disbursed to SMEs, at an 8.5 per cent interest rate. Banks grant loans to SMEs with the use of own money sources (people’s deposits). Until December 2017, the disbursement of loans by private banks amounted to Ks 732.940 billion. It also includes loans disbursed to SMEs under the Credit Guarantee Insurance (CGI) system jointly operated by Myanmar Insurance and private banks. Under the CGI system, three private bank granted loans of Ks 2.653 billion to 226 businesses until January 2018.

It is the soft loan as SMEs gets two-step loans at an 8.5 per cent interest rate. Other loans are disbursed with the market price. Especially, banks find it difficult to grant loans based on deposits, at an interest rate lower than the market price. In future, SMEs will have more opportunities to get loans.

Source : Eleven Myanmar

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