“If you don’t pay the instalments, they won’t leave your house,” said Christina Hamine, a microfinance debtor from Kanthale, Trincomalee.
Microfinance in Sri Lanka is seen as a driver of economic prosperity. However, today, many have fallen into crippling debt with the very companies that offered to help them. In their despair, they have been harassed, bullied, and threatened by the companies to settle.
“After we had breached the deadline, they insisted that we either settle the loan or face the police,” recounts Kuganesan Selviyanjali, a debtor from Kiran, Batticaloa.
“I didn’t want to face the company agent again,” recalls Sinnaiya Arulselvi, a debtor from Kotagala, Nuwara Eliya. “I found a can of kerosene oil and used it to burn myself.”
None of these individuals were background checked for their ability to repay the companies. So, it’s probably fair to ask why a microfinance company would so recklessly hand out loans in the first place.
“They say they get a salary,” says U. R. M. Sita Ranjani, Council Member of Kanthale’s Local Government, of the company agents. “But they will not go until the loan is given because they get a commission.”
The lackadaisical regulation of local microfinance companies combined with the low financial literacy and legal awareness of their borrowers creates ideal conditions for exploitation.
Is there still hope for these unfortunate victims? Stay tuned for our upcoming mini-documentary series to find out.
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