Saturday, 01 May 2021 15:23

Micro finance companies defend against accusations of alleged malpractices   Featured

The Lanka Micro Finance Practitioners’ Association (LMFPA) said it was concerned over several protests and media reports over indebtedness seemingly due to alleged malpractices of microfinance institutions.

“We are concerned about these protests and media reports because they may make a serious implication on the industry as a whole.

Similar media reports appeared on several occasions in the recent past and LMFPA responded to these institutions with the good intention of finding any misdoing by any of our members and rectifying them,” the association said in a media statement.

For example, there were reports that claim there had been over 200 suicides due to microfinance; the LMFPA have requested them to provide details of such suicides to verify the facts.

Unfortunately, the parties that proclaim such a number of suicides due to microfinance, failed to support their claim with any specific information such as name of the dead person, when and where even when LMFPA inquired from them..

The biggest concern over these issues is that well-mannered institutions’ reputations that are in the LMFPA membership are being tarnished in addition to the destruction of the entire microfinance industry.

There may be loan sharks that operate in the guise of microfinance and micro credit luring many low income people into a debt trap by exploiting them.

The Microfinance Institutions (MFIs) that have been in operation for a considerable period of time are not only interested in alleviation of poverty but also in social empowerment of their customers. In fact, there are thousands of customers who have grown their businesses through long association with MFIs.

Microfinance institutions suffered heavily in recent times due to factors beyond their control. The loan write-off programme implemented in 2018 by the government ended up with high NPL ratios of MFIs due to willful default of loans by large number of borrowers who were not eligible for the loan write-off.

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