Audit: 41% of SDFC loans not repaid regularly

An audit report has shown that the SME Development Finance Corporation (SDFC), a government-owned lender to small and medium enterprises, has not yet received 41 percent of its loans from 2019 to 2023 due to irregular repayments.

According to the 2019-2023 compliance audit report released by the Auditor General's Office, the Ministry of Finance allocated MVR 1.14 billion to SDFC from 2019 to 2024, and how the company had suffered major financial loss up to 2023.

According to the report, out of the MVR 1.57 billion loans disbursed to 1,428 individuals by 2023 from SDFC’s capital, MVR 1.36 billion is still outstanding.

Of the MVR 1.36 billion, MVR 554 million is classified as Non-Performing Assets (NPA) as the loan has not been repaid for more than three months.

That is 47 percent of the outstanding loans issued by SDFC.

In addition, the company is still outstanding of MVR 151 million by 2023 as the outstanding payment of MVR 878 million on loans issued to 827 beneficiaries is not being paid regularly by the monthly repayment date.

SDFC has determined that MVR 107 million of the MVR 554 million NPAs as of 2023 will not be recovered. Only MVR 12 million has been recovered from 2024 to mid-July last year, the report said.

With that, the Auditor General’s Office recommended that the company further strengthen its lending criteria before issuing new loans, and continue taking action against those who are not paying according to the loan agreement as per the company’s recovery manual. The Audit Office has advised the SDFC to take legal action against those who have not repaid the loans.

According to the audit report, SDFC's annual losses have decreased since 2022. The company posted a net profit of MVR 45.21 million last year.