SLCSMI Proposes Rs. 300bn ‘Bad Bank’ to Rescue SMEs
- Editor
- February 12, 2026
- Business News, Investment
- SME
- 0 Comments
The Sri Lanka Chamber of Small and Medium Industries (SLCSMI) has unveiled a Rs. 300 billion “Bad Bank” proposal to address the SME sector’s debt crisis, which includes an estimated Rs. 460 billion in non-performing loans.
The plan seeks to absorb toxic assets and provide viable businesses with a five-to-ten-year restructuring window, shielding them from forced liquidation. Funding would come from a levy on bank profits, idle EPF/ETF balances, and low-cost international loans.
Chamber leaders said the concept received broad support during a Committee on Public Finance discussion, including from Central Bank officials.
The SLCSMI warned that without intervention, thousands of family-run enterprises could collapse, deepening economic distress. Officials also raised concerns about the proposed VAT threshold reduction and infrastructure gaps, including the absence of accredited local testing labs for exporters.
