The Role of Banking in Rural Enterprise and Development

IRED set up a development intervention in the Puttalam District on the west coast of Sri Lanka to help villagers set up small scale business ventures; access technological and financial assistance; arrange for marketing and re-investment; and introduce welfare measures to imporve the quality of life of the villagers involved. It is chaired by a grassroots women leader; the manager was an acquaculturist and the other directors are Bankers, Professionals, Businessmen and Village Leaders.

The Banker plays a key role in providing financial assistance to the villagers to implement their entrepreneurial plans in small scale businesses.

One of the most difficult areas in business is findingsuitable finace or arranging business transactions when it is fould and following up the various stages.

At the best of times banking is frightening. To a villager who is not English speaking; who does not have the ability to furnish guarantees and collateral, banking is a real obstacle.

So the Banker tries to explain and assist the process involved in getting funding. When received how to make the best of it, getting the maximum benefit available from deposit and investment.

He found he had advise even Directors who have limited knowledge of Banking. He informs people of precedures; demands of guarantors; proof of liquidity; saving capacities; short term loans; revolving funds. Making the most of one’s assets and using them only when actually required; keeping them in reserve and accumulating interest; re-investing of profits in the business. All this is a very important part of the business enterprise in which Grindlay’s Bank plays a vital role.

Often donations were not outright grants but used to help the micro entrepreneur to access funding through Banks and Rural credit societies. That is, the Bank provided them with co-lateral.

When the loans were re-paid on time, their ability and reliability were improved. They became worthwhile customers and could deal directly with the Banks after some time.