Micro finance debtors call for loans to be scrapped 

Staff Writer | Author . පරිවර්තනය කරන්න සිංහල හෝ தமிழ் 7/6/2020 5:59:00 PM
Micro finance debtors call for loans to be scrapped 

The Collective of Women Victimised by Micro-Loans are calling for the abolishment of all micro credit loans.

Holding a press conference recently the group said that the recent killing of Sunil Jayawardena, the President of the self-employed professionals’ national three-wheel association, who had been mobilising against leasing mafia highlights the widespread malpractices and illegal activities by the finance companies. 

“Economically vulnerable communities have been victimised by micro-loan mafia for a long time. Odious debt and numerous forms of illegal, anti-social and physical oppressions that debt collectors are executing on women have driven many to commit suicide during the last couple of years. However, these incidents did not receive adequate reporting in the media to raise public awareness” the organization said. 

According to them predatory micro loans have pushed more than 2.4 million women across the country into a debt trap. They noted that these women who are not in a position to pay back debt accumulated due to excessive interests and as a result have had to undergo shaming, name-calling and other kinds of violence at the hands of finance companies and their officers. 

“Many women are trapped in a web of debt as they have borrowed from multiple sources to pay back micro loans. Unable to pay, many women have sold their gold, household goods and some have even mortgaged their land” they said. 

“Trying to meet debt payments with all of the household income have led to domestic disputes and have subjected women to domestic violence. By 2020, about 200 people had committed suicide due to micro loan related issues” they revealed. 

According to them the women victimised by micro loans have been explaining their predicament and presenting our demands to the government since 2017 but to no avail. 

The Central Bank of Sri Lanka had executed a partial regulation on microfinance by imposing an interest rate cap at 35%. The Government in 2018 also waived off the debt of 45, 139 people within a limit of Rs. 100, 000/= in 12 districts which were affected by the drought. 

“However, these actions were not adequate to address the magnitude of the microfinance debt problem or to enable microfinance borrowers some relief to resume repayments on their own. By now many women powerless to pay back their debt are excluded from the formal banking and finance sector as they are listed in the Credit Information Bureau (CRIB)” they added also revealing that Finance companies have assumed legal action to recover money from many women who defaulted. 

“Our livelihoods: farming, plantation work, small business and daily wage jobs, are constantly battered by the frequent droughts, floods and Easter attack as well as by COVID-19 related disruptions. Unfortunately, micro loans have been excluded from the Central Bank directed six months debt moratorium announced on March 31” they said. They questioned as to why the government has observed a stoic silence in the face of their problems.

The group also accused the government of being reluctant to take action against abuses and illegal activities by the finance sector which is under political patronage and sustained through political power and investments by the politicians. 

“We demand immediate government intervention to cancel our debt and relieve our burden. We also demand that necessary regulations on banks and the finance sector be enacted, particularly to safeguard the finance consumers. The government should also mediate to create more conducive credit mechanisms to suit the needs of small producers like us” the women said.