Audit finds 41% of SDFC loans classified as non-performing
According to the report, SDFC has disbursed loans worth MVR 1.574 billion to 1,428 beneficiaries. Of this, MVR 1.357 billion remains outstanding.
An audit has revealed that 41 per cent of loans issued by the SME Development Finance Corporation (SDFC) are not being repaid on schedule.
The compliance audit of SDFC, covering the years 2019–2023, was conducted by the Auditor General’s Office at the request of Parliament.
According to the report, SDFC has disbursed loans worth MVR 1.574 billion to 1,428 beneficiaries. Of this, MVR 1.357 billion remains outstanding.
By the end of 2023, MVR 554 million had been classified as non-performing assets, representing 41 per cent of total loans issued.
The audit further noted:
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MVR 151 million is outstanding due to non-payment of monthly instalments totalling MVR 878 million.
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Of the MVR 554 million in non-performing assets, MVR 107 million across 150 loans was declared non-recoverable on 31 December 2023.
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Thirty-five loans, worth MVR 19 million, were written off before legal action was taken.
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Nine loans worth MVR 5 million and 57 loans worth MVR 49 million, though registered and pending in court respectively, were also written off.
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Between last year and 17 July this year, MVR 12 million was recovered.
The audit noted that the main objective of SDFC was to provide loans at concessional interest rates to support the establishment and expansion of businesses. However, high levels of loan defaults pose risks to the company’s financial sustainability.
The report also highlighted that delays in taking timely action against defaulters may have encouraged further non-repayment.
Despite concerns over defaults, the audit stated that SDFC’s annual losses began to decline from 2022. In 2023, the company recorded a net profit of MVR 45.21 million, the first profit in its operational history.
