Project Overview Sri Lanka

Sri Lanka Credit Union Reconstruction Project

CUFA has joined with WOCCU to undertake a a project that over a three-year period will strengthen Sri Lanka’s credit cooperative system comprised of Federation of Thrift and Credit Cooperative Societies of Sri Lanka (SANASA) and its member district finance facilities (DFFs), SANASA Development Bank, and credit unions. The credit cooperative system serves rural communities and farm households by increasing their access to financial services including savings and credit. Specifically, the project activity objectives are to:

Restructure and recapitalize up to four DFFs or SANASA Development Bank branches; and

Rehabilitate up to 80 credit unions.

Specifically, WOCCU and CUFA anticipates:

1. a 100 percent increase in credit unions’ total membership—predominately comprised of rural and farm households—from approximately 40,000 members to 80,000;
2. an increase in credit unions’ total assets from $4 million to $8 million;
3. an increase in credit unions’ total loans outstanding from $3.5 million to $7.1 million as a result of more members having access to credit union loans;
4. credit unions’ loan delinquency less than 5 percent;
5. an increase in credit unions’ loan disbursement from approximately $6.8 million to $12.8 million;
6. an increase in credit unions’ total savings and shares from $3.75 million to $7.5 million;
7. establishment of a supervisory framework that can prevent credit union failure and distress through regulatory language incorporated into the DFFs and SDB branches loan policies providing for a reliable means of enforcement of “regulations” under the threat of a credit union losing access to its line-of-credit; and
8. introduction of successful DFF and credit union models that serve to demonstrate how restructuring and rehabilitation increase outreach, both scale and depth, through improved financial performance.

Restructure and Recapitalize DFFs and SDB branches

Approximately 28 percent of the funds will be spent to restructure up to four DFFs or SDB branches, and 36 percent to recapitalize the DFFs or SDB branches.

The project will restructure Sri Lankan participating financial institutions by:

1. drafting and implementing policies and procedures with special attention to loan administration, policy and procedures;
2. installing an acceptable system of accounting, including management accounting reports, and internal controls;
3. providing professional staff development staff through on-site, one-on-one training and mentoring; and
4. developing management capacity by training in Wisconsin credit unions and by Wisconsin credit union professionals providing training in Sri Lanka;