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Sri Lanka: Supporting SMEs in rural areas with Hatton National Bank

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Logo Hatton National Bank
©Hatton National Bank

PROPARCO has just allocated a USD 60m credit line to Hatton National Bank to finance loans for small and medium-sized enterprises in Sri Lanka. At least half of this credit line will be earmarked to finance SMEs in rural provinces which suffer because they find it harder to access banking services.

Over 75% of companies in Sri Lanka are SMEs. They provide 45% of employment, particularly for women and young people, and account for 52% of national GDP. They are therefore one of the main contributors to the country’s  development. Yet they are considered to be riskier and find it harder to access long-term financing, especially when they are located in rural areas.

This is why since 2015, PROPARCO has been helping Hatton National Bank Plc (HNB), one of the main players in the SME segment in Sri Lanka, develop its portfolio of small and medium-sized enterprises. PROPARCO’s objective with this new credit line is to encourage HNB to develop its portfolio in rural areas in the country, in order to support SMEs located outside the most economically active regions which find it harder to obtain financing to develop.

HNB is one of the top private sector banks in the country and has one of the most extensive banking networks, with 250 branches (including about 60% in rural areas). It operates virtually nationwide, including in the North and East, the two poorest regions of the country. The bank is currently supporting some 100,000 SMEs and has developed a range of services to assist these companies by facilitating their access to markets or improving their financial management. The bank is also the leader in the microfinance market and therefore a major player in financial inclusion in Sri Lanka.