February 14, Colombo (LNW): The Sectoral Oversight Committee, chaired by MP Gamini Waleboda, convened in Parliament to address the repercussions of the economic crisis resulting from the microfinance turmoil in Sri Lanka.
During the recent committee meeting, representatives from organizations in Sri Lanka, advocating for those affected by microfinance loans, were summoned. Key stakeholders including officials from the Central Bank of Sri Lanka, Ministry of Finance, Economic Stabilization and National Policy, Department of Prosperity, Women, Child Affairs and Social Empowerment Ministry, and the Department of Registrar of Companies were present to discuss strategies for alleviating the impact of the crisis.
In a compelling revelation, Sri Lankan organizations representing the adversely affected individuals emphasized that a staggering 2.8 million rural persons, of which 2.4 million are women, have suffered due to the microfinance crisis. These findings, dating back to a 2018 survey, underscore the dire consequences faced by rural communities. Despite the loans being of a relatively small amount, the inability of rural borrowers to repay them, coupled with exorbitant interest rates of 38% to 48%, has plunged the lives of many rural women into misery. Additionally, the crisis has forced more rural women to seek employment in domestic roles in Middle Eastern countries.
The committee disclosed that the microfinance crisis primarily affected the largest group, which had obtained loans from six major non-banking financial companies under the Central Bank’s supervision. These institutions accounted for 80% of the total microfinance loans amounting to 84,000 million rupees. Disturbingly, it was revealed that the properties of those who obtained loans had already been seized, exacerbating the challenges faced by the aggrieved parties.
Despite the gravity of the situation, representatives of the affected parties pointed out that the proposed Bill fails to adequately address their concerns, leaving them to grapple with even more challenges in the aftermath of the microfinance crisis.
