Sudden Increase of Women Headed Families, involution into the Micro finance debit.-R.Ram

“The woman headed families, who sign 18 places and get micro finance loans without knowing that they
are denied the right to know what conditions are there to move their daily life, are unable to settle the
instalment due to the Corona and economic crisis.”

“I have lost my elder son, who earned for my family and my husband one after and other. Now, I am
alone with 5 children. A loan for livelihood. Another loan to settle it. Another loan for funeral of my
relations. Now, I am suffering from not paying the weekly instalment of any loan” said Sooriyakumar

Picture  – Sooriyakumar Kalyani, who bears the burden of family after losing her husband and
son. The husband of Sooriyakumar Kalyani, who is a mother of six children at Pilakkudiyiruppu in
Mullaiteevu, died in an accident a month ago. Her eldest son had already died. Now, she is unable
to more their daily life.
In past, her husband and eldest son earned income to move the family. In addition to it, Sooriyakumar
Kalyani also went to garden work. Their life moved on with a moderate income.

After Corona, the opportunities for day to day work have decreased. Because of it, Sooriyakumar Kalyani
planned to do self- employment. She decided to cultivate ground nuts. Then, an employee of a financial
institution, who visited to her home and said he gave loans for self- employment. He also said the three
women can form a group and get a loan. No witness is required to avail the loan. He also mentioned that
family card, Identity card and Electricity bills are enough. Sooriyakumar Kalyani thought loans are
available easily and she hope that their future will be bright.
She got loan by hooking up to women from her neighbour. She didn’t know that she was getting loan
under the micro finance loan scheme. She is suffering from the situation, unfortunately occurred to her.
Sooriyakumar Kalyani said that, when the three of us got together, they informed me get the money.
They got sign from them at 18 places and gave money. After that, I paid the money weekly. Now, I am
unable to pay it.
Not only that, current interest for a lakh is Rs.45000.00. They come at any time to collect the weekly
amount. I explain my situation to them, but they wait at my home till night to collect the money. I am in
confuse whether to take care of my five children or pay off the debt. Said Sooriyakumar Kalyani.
Micro finance loans are defined as the provision of financial service to law income people by the
consultant committee for helping poor people. This committee also notes that it provides loans, savings
and other essential financial services to the poorest, they are not served by conventional bank mainly due
to the inability to provide adequate collateral.
On this basis, the microfinance system was also introduced in Srilanka. After civil war, these type of
lending institutions have been started to act in North, East and North Central provinces for agrarian.
Even the micro finance institutions, authorized or non – authorized by the central bank of Srilanka
provide loans, the life style of the public didn’t be positive. Instead of it, it has encouraged them to
involute into the “debt trap”.
It is confirmed by the report of the UN special reporter on contemporary forms of slavery, Tomoya
Obakata, who visited Srilanka in December 2021.
He has pointed out that, there were more than 200 suicides due to the micro finance loans and the
majority of them were woman, in a report submitted in Geneva at the end of Srilanka’s mission in 2022.
In this case, it is inevitable that women headed families, who were involuting into the micro finance debt
are unable to settle the amount due to the Corona virus and economic crisis.
A cross-sectional study was conducted during field trips to the districts of Amparai, Trincomalee, and
Mullaitivu, which focused on women-headed households with microfinance loans. The study confirmed
that women in these areas are currently facing a crisis due to their inability to repay their loans.
The study focused on ten women-headed families in each district, and it was found that four families in
Amparai and six families in Tirumala were aware that they were receiving credit through the microcredit
program. However, none of the families in Mullaitivu knew about it. Moreover, eight families in
Mullaitivu district alone received and completed the loan application in their mother tongue.
All surveyed households in all districts were found to be under significant stress due to various factors
such as high interest rates, the ongoing COVID-19 pandemic, and loss of jobs caused by the economic
crisis. The non-payment of installments has led to mental and physical harm for all but one family in
Ampara, and they have also faced legal challenges from microfinance institutions.

Ahamathulebai Bahniya, a 40 years old mother of three children from Ampara, Islamabad has been
separated from her husband for 09 years. She got micro finance loan to start a self- employment and is
unable to settle the amount.
And, it is also confirmed in the study that the woman headed families got the loan to improve their
However, now they are struggling to move their daily life and cannot settle the loan they have received
and the amount they have to pay is continuously increased due to the “day interest”.
She said, “I have received loan Rs.60, 000.00 for self- employment. As the expenses for the education,
electricity bill and all the things have increased, the house hold expenses also increased. Therefore, I
couldn’t pay the instalment on time. Now, my loan balance is Rs.75, 000.00. Even, I told my situation to
them, they haven’t yet accepted it”.
Not only him, Number of 2,898,000 people in nationwide have been trapped into the micro finance loan
provided by various micro- credit institutions. The union of Women affected by micro finance loan
pointed out that 84% of it (Number of 2,439,000) is women.
As a result of more than a decade of efforts to regulate unregulated institutions providing micro finance
loans, the Parliament enacted the Micro finance Act No.6 of 2016 and the above Act came into effect on
July 15 of the same year.
Not only that, the government, governed in 2018 has informed that the unpaid micro finance loans above
1.25 billion of 45,139 women in the North, East and North Central provinces settled by it.
Meanwhile, the micro finance lending institutions have written off interest payments value Rs.141.41
million in respect of their loans, according to the annual report of the Ministry of Finance for the year
But, there is no comprehensive data whether the amounts allocated by the government have reached the
appropriate beneficiaries and change their critical situation.

Moreover, there are situations where micro finance institutions do not maintain transparency about their
interest rates. Also, those companies do not provide the application forms in the mother language of the
people receiving their services.
H.P.Chandrikamane, 42 years old, a mother of two children from Trincomalee Kallarawa engaged in
maritime industry has had an experience in non-transference of interest rates. She has borrowed sixty
thousands only and paid one lakh and forty thousand till now.

Picture  – H.P.Chandrikamane, who has faced crisis after receiving loan.
“I needed money urgently. I didn’t read the application form as it was in English language. There wasn’t
any clarification in the application form, if we can’t pay the amount for the loan whether I would have to
be in jail or our properties would have to be taken away. I think about the high interest while only settle
the amount.”
At the same time, C.Moganaveni, a mother of two children from Iluppaikkulam, Trincomalee, said that
she got a loan of one lakh in 2017 and then worked in abroad and paid the instalment continuously for
two years.

Picture – Moganaveni facing crisis due to the non- transparent interest collection of financial
After returning from abroad, she had met with an accident and broke his arm and was unable to pay the
loan instalments. She says that she had to hear very aggressive expressions from the collectors.

After that, when she tried to settle the loan whole, it was reported that there was a balance of 96 thousand.
If I pay the amount Rs.57 thousand totally, this loan will be settled.
In this case, as per the instructions of the lending institution, I pledged the jewel and paid Rs.57,000.00 in
cash. But, in two months, I was informed that I have to pay Rs.12000.00 again. When I asked for the
reason to it, they didn’t answer. In three months, that amount had grown to Rs.45,000.00. Now, they
pressure me to pay that amount. Currently, I am unable to pay the remaining amount.” she said with tears
in her eyes.
The Central bank of Sri Lanka says that it is concerned about the activities of the micro finance
institutions, and it provokes to illegal deposit schemes, exploitation of customers and unethical lending
practices. Though, it is necessary to regulate and supervise the unregulated institutions engaged in micro
finance business in Sri Lanka. Said Central bank of Sri Lanka publicly.
However, that mechanism has not been established till now. UN special reporter Tomoya Obogada said
that, “the government has not taken any effective or timely action to regulate and monitor exploitative
micro finance institutions.”
Meanwhile, Renuka Karunaradna, a mother of two children, 36 years old, from Velioya Sabumalthenna
tried to end up her life and recovered from it.
Now, she is not only try to settle the loan, but also give awareness about micro finance to the families
above 50 in her village.

Picture – Renuka Karunarathna, who tried to end up her live and is struggling to live.
She remained her painful past and said that, “I had got loan to poultry farming in the situation of
agriculture fails. Although, I was unable to settle the instalment.”
“In that situation, a collector, who came to collect the instalment, sat at my home for a long time. So, I
didn’t know what to do at the time. I said him I am going to nearest home to collect money and tried to
suicide. I had saved by neighbours. From that day, I have been acted for my children and my society with
It is very important that those who are struggling in micro finance loans, should act for the society. It is a
great humanitarian service to stop those who tries to suicide.

Like that, it is also special that a community group in association with the local mosque management has
brought the micro finance credit issues to an end in Ampara Nindavoor. They have given smooth
conclusion through Islamic religious guidelines.
That is, According to Islamic teachings, charging and paying interest is a wrong thing. In that way, the
said social group brings together the loan providers and borrowers on one platform and get help to settle
the loan from donors. It is a great example for a better settlement.
However, such awareness and mediation activities remain limited. It will help to end up the issue of micro
finance which has caused massive problems.
Moreover, Gauthule Jayatissa, president of the federation of Agricultural Progressive Communities, wants
that “there is a land grabbing agenda behind the micro finance program”.
Though, insisting an end to the micro finance loan permanently and when the industrial revolution, the
micro finance institutions influenced to land grabbing of the village peoples, while the villagers moved to
town. He pointed out that USA, England and France are good example of this.

Caption here (Thayalini Indrakularasa, GPJ Sri Lanka)

Picture  Nataraja Devakrishnan while clarifying for women
Nadaraja Thevakrishnan, the Chief Coordinator of People’s Organization for Social awareness, tells that
effective implementation of the government’s current programme is necessary to find immediate solution
to the micro credit problem.

Specifically, he mentioned that the loan through women organizations, thrift loan scheme, rural bank
loan, samurdhi loan, livelihood scheme are government loan assistance schemes aimed at woman, which
doesn’t create crisis.
However, Nadaraja Thevakrishnan, points out that, when particular scheme were carried out involving of
rural woman in the past, their goals were weakened as they were fraught with political interests and
However, Dr. Dr. Akilan kathirkamar Economic specialist, Senior Lecturer at University of Jaffna has
suggested four strategies for permanent recovery from micro finance credit problems.

Dr. Akilan kathirkamar
1. Should deduct the loan amount or written off the loan or given time to people.
After increasing their incomes without settling the loans for a certain number of years, and
settling the loan at a lower interest within a specified period. Debt burden of people increases to
get loan to settle the loan, which was already got.
2. It is important of controlled interest. The government should implement the designated interest
legally. Micro finance credit providers should strictly observe that they should not charge more
than 25-30% interest. Based on that, the financial sector will run smoothly.
3. If a plan to reduce the amount of loans is implemented, these micro credit institutions will not
involve into this sector as their profits will be decreased. Then, the money lenders in the village
will involved into this sector. They also offer loans at high interest. Though, women leadership
can be joined in the cooperative sector as an alternative financing scheme. Particularly, it can be
carried out through cooperative village associations.
4. Even the new Credit Regulatory Authority for Sri Lanka approved by the Cabinet in 2019, it has
not been implemented yet. It has created an unmanageable situation. So, the law of loan scheme
for Regulatory Authority should be approved in Parliament and implemented quickly.
Therefore, the government has a huge responsibility to effectively protect the life and future of women
leaders and their relationships by implementing the clarification and legal definition of micro finance

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