SDFC reports rise in loan repayment rate, despite 36% remaining unpaid

SME Development Finance Corporation (SDFC) stated yesterday that the rate of loan repayment is increasing even though 36.93 percent of loans worth a total of MVR 1.7 billion issued as of the end of 2024 remains unpaid.

SDFC said that loan repayment has seen a 24 percent rise compared to 2023.

The main reason for this, SDFC believes, is increase in recovery efforts by the corporation and provision of payment plans to non-performing customer groups.

The corporations said that one of the biggest challenges faced in recovering loans is the lack of financial awareness amongst unofficial SMEs. To address this, they are now conducting financial literacy programs and information sessions for customers.

Other challenges they cited include:

- SMEs are most affected by economic difficulties

- Failure to obtain forecast project revenues and delays in project implement owed to difficulties in obtaining material and workers due to the geographical make up of the country

- Challenges in recovering the funds as customers keep their business earnings in multiple banks

SDFC said that although SMEs face difficulties in loan repayment, the corporation extends assistance in addressing challenges faced in completing projects. This includes loan rescheduling, extending grace periods and other such concessions.

As per information shared by SDFC with Mihaaru News, as of the end of last year, the highest number of loans have been issued to retail businesses. This amounts to MVR 205.9 million to 699 facilities.

The second highest number of loans were issued to guesthouse businesses, amounting to MVR 403.88 million to 677 facilities.