News

The microfinance scourge: A’pura, P’naruwa victims left high and dry 

  • Relief underway through Samurdhi Bank 

  • Expanding pilot project in A’pura 

  • Moves to provide financial literacy 

 

Despite numerous pledges to the contrary, millions of microfinance victims around the country are yet to benefit from the special programme launched by the Government that proposed to use the existing Samurdhi banking system to provide them relief, The Sunday Morning learnt. 

Victims, especially those who live in Polonnaruwa and Anuradhapura, as well as social activists, claimed that they all are waiting for the Government to fulfil its promises in this regard. However, the situation of the victims has gone from bad to worse due to the ongoing economic crisis. 

Speaking to The Sunday Morning, Polonnaruwa-based activist T.B. Sarath stressed that even though the Government widely publicised certain relief programmes, these are yet to reach the ground level. 

“There is not a single victim that we have heard of receiving such financial assistance as relief from the microfinance burden,” he stressed, adding that the situation in other areas of the country is the same – so much so, that if somebody received relief from the debt trap, their immediate circles would get to know immediately. 

“The situation of these poor people is still similar, and, in some cases, even worse than before. There are many people who have taken several such loans and sold their properties to repay such loans,” he added. 

Sarath noted that the stories of these poor people are not reaching the top level, and as a result, the microfinance issue has not been considered a national issue, even though victims are being reported from each and every corner of the country. 

According to statistics, in Sri Lanka, there are about 15,000 microfinance institutions illegally in operation. Only 54 companies have been registered with the Microfinance Association, and only those who obtained loans from those companies enjoyed the relief measures and benefits granted by the Government on several occasions. However, according to the Central Bank of Sri Lanka (CBSL) website, only four institutions have been registered with the CBSL. 

Speaking to The Sunday Morning, State Minister of Samurdhi, Household Economy, Microfinance, Self-Employment, Business Development, and Underutilised State Resources Development Shehan Semasinghe said that the pilot project launched to provide relief to microfinance victims was currently being conducted successfully in Anuradhapura, and that based on the said programme, it would be expanded to other parts of the country as well. 

Under this programme, a loan of up to Rs. 300,000 is to be provided for those affected to settle their debts, through the existing Samurdhi banking system, he explained. 

“There will be a revolving fund working with the Samurdhi system. While giving this option, somebody could say that this amount is not enough. However, initially, we don’t want to give a lump sum. But if they perform well, we can actually show that the need is there, and that it has been managed well. We can increase the amount on the instructions of Prime Minister Mahinda Rajapaksa. We are now in the process of providing them with financial literacy,” he added. 

However, when questioned about the total allocations, he stressed that the microfinance issue is not prevalent in all districts, but only in the Uva, Northern, and North Central Provinces, and in parts of the Central Province, especially in estates. Therefore, the initial amount would be released to the Samurdhi banks and the system would thereby be monitored through these, he explained.