Monday, 19 April 2021 09:58

Micro finance sector undergoes reforms despite present cash crunch Featured

Folloiing the over 40 day protest campaign of hundreds of debt ridden poor women in Polonnaruwa , the govern men has initiated micro finance sector reforms aimed at uplifting the living standard of the low income households who have already been trapped in a vicious debt cycle.

Women whose lives have been shattered by exploitative microfinance debt in Sri Lanka are stepping up their struggle for justice.

In the face of the deepening indebtedness, tightening pressure from microfinance and finance companies and the neglect of the government, the Collective of Women Victimised by Microfinance is now conducting a protest and a Sathyagraha at Hingurakgoda, Polonnaruwa,

The Finance Ministry is now in the process of devising new plans of overhauling the microfinance institutions (MFIs) market with the introduction of public and private sector-driven, subsidised credit and welfare-oriented credit provided by co-operatives and community-based organisations and licensed financial institutions.
The new reforms plan and package of proposals with special focus on poor rural women will be presented to the Parliamentary Select Committee (PSC) on Gender Equality within a month, a senior of the State Ministry of Micro Finance said. .

The Treasury has already released Rs. 542 million for debt relief schemes and it operates a revolving fund. It has been decided by the government to continue the loan programme, increasing the maximum credit limit to Rs.60,000 per person.

The low interest loans are being provided to the debt-affected in the North and North Central provinces.

The Treasury has allocated Rs.292 million for the North and a sum of Rs. 250 million for the North Central to Co-operative Rural Banks and Thrift and Credit Co-operative Societies.

It has been estimated that around 14,000 people in the North Central province are suffering as they have fallen into the micro finance debt trap.

Micro finance institutions will be regularised and they will be involved in providing ‘credit-plus’ services to their clients, particularly to those in low income categories.

Development of rural infrastructure facilities will be given priority to improve the outreach of MFIs in remote rural areas and encouraging the private and NGO sectors to involve more effectively in microfinance provision, he revealed.

Enactment of a legal framework will be expedited to regulate unregulated money lending activities, thereby creating a better and more effective regulatory environment for money lending institutions.

A Microfinance and Credit Regulatory Authority Act (MCRA) has already been drafted towards this end and the approval of the Cabinet of Ministers for this will be sought shortly.

 

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