'Write-off micro finance loans and start anew'- says Mahinda 'Write-off micro finance loans and start anew'- says Mahinda
Apr 05, 2019

Micro Finance: ‘underworld threat invading villages’ – Mahinda reveals

Opposition Leader Mahinda Rajapaksa urged the government in parliament yesterday (04) to write off the loans obtained from illegal micro finance companies and establish a new micro finance service at grassroots level.

He pointed out that with the involvement of the underworld this micro finance mafia is distorting the rural economy, destroying the normal lives of the rural people and is destroying families.

The Opposition Leader said, “In the past the village people were used to saving money between themselves and giving loans to each other with that at a time of need. There was a ‘seettu’ scheme which gave them the much needed funds to set up a small business or any other household need.

He added, “The government has stated, the loans need to be repaid by the public, and there is an issue as some of these companies cannot be identified. The situation is getting worse, and due to this many individuals have debts to pay.

A representative receiving a loan, with the loan comes the attachments and later these result in bogus and threats. These activities are carried out by associates of the underworlds groups, this destabilizes the economy of the ordinary people”.

To obtain a loan trust alone is not enough, the innocent villagers have to pledge their property as collateral. 

The fisher folk have to pledge their fishing gear and housewives had to pledge their household items.

However, due to the failure of their crops sometimes they are unable to pay back the loans.

He said that although the government has promised to write off these loans they claim they are unable to even identify the lean sharks and have not written off these loans.

Serious situation- Interest between 30%-100% per year

Today the situation has aggravated and instead of micro finance companies the loan sharks have spread their network throughout the country and they are charging interest for loans between 30%-100%.

The interest is charged from the date the loan commences and the collectors come to the homes of the person who obtained the loan to collect the instalments.

This has spread to not just threats and abuse but they also obtain bribes, it is reported.

This has led to distort the rural economy and it has also led to disputes within families and destroying these families.

These people have had to pledge their jewellery in return for the loans and most often they lose their jewellery as they are unable to pay back the loans.

They don’t even have the basic investment for their farming and the rural economy has plunged into a very grave situation.

Therefore, he said the government should implement a micro finance system at grassroots level replacing these illegal micro finance and loan shark systems.

He asked the government to reveal their stance on this matter.