Government to right off micro finance loans

Government to right off micro finance loans

8 December 2019 10:43 pm

The Government is considering concessions for micro finance loan victims while introducing strict regulatory control on micro finance businesses using ‘rough’ tactics in the loan recovery process.

State Minister for Development Banks and Loan Schemes Shehan Semasinghe said that immediate relief will be granted to borrowers of micro finance loans who have not been able to repay it due o financial difficulties.

Finance Ministry will issue necessary directives too right off micro finance loans obtained by the poorest of the poor and women who have branded as loan defaulters  by financial institutions responsible for imposing high interest rates on them.

Prime Minister Mahinda Rajapaksa has held initial discussions; with the state and private banks to find solutions for problems of micro loan borrowers facing severe financial difficulties.

Minister Semasinghe disclosed that prompt concessions will be given soon when relevant reports are received from the respective banks.

Micro finance lending involving banks, finance and leasing companies has become a complex problem in Sri Lanka, economic experts said adding that patch work solutions will not help in solving this burning issue.

More than 82 per cent of Sri Lanka’s population including 92 per cent of the poor live in the rural areas of the country. Therefore, they have become easy targets for these money lenders or lending institutes, they added.

The gravity of this problem cannot be assessed as desperate borrowers have resorted to sometimes killing themselves as they have no means to repay loans, they said, pointing out that at least 170 have committed suicide last year.

According to an official fact finding report a large number of rural people have fallen prey in a cycle of debt, with many lenders charging very high rates of interest.

Villagers had to face harassment from the debt collectors and there have been allegations of physical assaults.