Cabinet approves sale of government’s SDFC shares to BML

The Cabinet has approved the sale of the government’s shares in the SME Development Finance Corporation (SDFC) to the Bank of Maldives (BML), in a move aimed at enhancing the corporation’s financial capacity and ensuring uninterrupted support for small and medium enterprises (SMEs).

The decision was announced by the President’s Office following a Cabinet meeting held on Sunday. The sale follows a proposal submitted by BML and a study paper presented by the Ministry of Finance evaluating the benefits of the move.

According to the President’s Office, once acquired, BML will operate SDFC as a Sharia-compliant Islamic finance institution, conducting all transactions in accordance with Islamic principles. The bank also plans to integrate SDFC with what it described as “the world’s most advanced digital banking system.”

- MVR 500 million in loans to be issued in the first year

- MVR 1.9 billion in SME loans to be issued over five years

- MVR 300 million in loans targeted at business start-ups over the next three years

Additionally, BML will expand its digital SME financing services across the Maldives through its existing nationwide network, while also digitizing and automating SDFC’s internal systems to reduce manual work and accelerate loan processing.

- BML will maintain current interest rates for loans issued through SDFC

- Governance of SDFC is expected to strengthen under BML, as it is a publicly listed company

- Financial services will be reshaped to create a more enabling environment for businesses, with the aim of increasing financial capacity and prosperity

The President’s Office emphasized that SDFC will continue to offer affordable financing to micro, small, and medium enterprises, with interest rates not exceeding current levels.

SDFC revealed last week that it has disbursed a total of MVR 1.7 billion in loans since its inception in 2019. However, 36.29 percent of those loans remain unpaid.

In response to questions from Mihaaru, SDFC noted that repayment rates have improved by 24 percent compared to 2023, despite a recent slowdown in loan disbursement due to financial constraints.

Established in 2019, SDFC has been a cornerstone of the government’s efforts to support startups, youth entrepreneurs, and women-led businesses. The institution has focused on enabling access to finance for those typically underserved by conventional banks.