{"id":61016,"date":"2021-04-04T10:11:03","date_gmt":"2021-04-04T10:11:03","guid":{"rendered":"https:\/\/websitedesigns.com.au\/elankanew\/?p=61016"},"modified":"2021-04-04T10:11:03","modified_gmt":"2021-04-04T10:11:03","slug":"debt-driven-suicides-continue-unabated-in-sri-lanka-by-piyumi-fonseka","status":"publish","type":"post","link":"https:\/\/websitedesigns.com.au\/elankanew\/debt-driven-suicides-continue-unabated-in-sri-lanka-by-piyumi-fonseka\/","title":{"rendered":"Debt-driven suicides continue unabated in Sri Lanka-by Piyumi Fonseka"},"content":{"rendered":"

Debt-driven suicides continue unabated in Sri Lanka-by Piyumi Fonseka<\/span><\/h1>\n

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Source:<\/span><\/strong>Dailymirror<\/a><\/span><\/p>\n

Despite microfinance loans represent only 3% of the total loan portfolio of the sector, the impact it has made on low-income families is immense. According to Movement for Land and Agricultural Reform (MONLAR), more than 200 people had committed suicide, during the last three years\u00a0<\/big><\/strong><\/span><\/p>\n

Women are pressured by thugs and debt collectors who come to villagers, utilizing all types of recovery methods including sexual favours. He also revealed there are cases of borrowers who tried to sell their kidneys to repay the loans.\u00a0 \u201cSome of whom had no option, have committed suicide.\u201d\u00a0<\/big><\/strong><\/span><\/p>\n

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\"\"Sometimes a loan obtained to save a life can end up taking another life, in the debt-stricken villages of Sri Lanka. A 24-year-old mother killed her child and committed suicide two months ago due to her inability to repay a loan of Rs. 400, 000 to a micro-finance company. It is just one story out of millions of borrowers. Like more than 2.5 million other people in Sri Lanka, most of them were women; she had turned to microcredit in an effort to lift herself out of poverty.\u00a0<\/span><\/p>\n

\nDespite microfinance loans represent only 3% of the total loan portfolio of the sector, the impact it has made on low-income families is immense. According to Movement for Land and Agricultural Reform (MONLAR), more than 200 people had committed suicide, during the last three years or so for issues related to micro-finance loans.<\/span><\/p>\n

Chinthaka Rajapakshe, Convener of the MONLAR revealed that women are pressured by thugs and debt collectors who come to villagers, utilizing all types of recovery methods including sexual favours. He also revealed there are cases of borrowers who tried to sell their kidneys to repay the loans.\u00a0 \u201cSome of whom had no option, have committed suicide.\u201d\u00a0<\/span><\/p>\n

\n\"\"The majority of women, trapped in this cycle are from more impoverished and war-affected areas including North and East provinces where a large proportion of the population still live below the poverty line. The dire situations in their lives force them to turn to these micro-finance organizations which charge their loans with up to 220% interest rate and apply compound interest.\u00a0<\/span><\/p>\n

\nWhile almost every sector of the economy is bearing the brunt caused by COVID-19 pandemic, low-income households, and small businesses have been disproportionately affected as they enjoy little savings or assets to help them cope. In Sri Lanka, as in many other developing countries, Microfinance Institutions (MFIs) are at the forefront of providing financial services to the low-income population.\u00a0<\/span><\/p>\n

\nMFIs gained attraction as a strategy for economic survival in the life of impoverished women. The main purpose was to empower them by generating income for themselves or their households. However, it hasn\u2019t been the same in many parts of Sri Lanka. Although the MFIs can play a significant role in terms of uplifting the lives of poor families, issues such as lack of national data on microfinance, high interest, weak legislative framework, weak coordination, and illegal methods of recovery have thrown the lives of many borrowers from frying pan to the fire.<\/span>
\nAs the source of income of the majority of MFI clients are under the informal sector, loan repayments of MFIs have been affected. Farmers are unable to sell their products. They are forced to sell at a very low price as the supply chain is disrupted due to the pandemic. Many small enterprises are also unable to operate their businesses with uncertainty on when they can reopen.\u00a0<\/span><\/p>\n

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The majority of women, trapped in this cycle are from more impoverished and war-affected areas including North and East provinces where a large proportion of the population still live below the poverty line.\u00a0<\/strong><\/big><\/span><\/p>\n

In Sri Lanka, as in many other developing countries, Microfinance Institutions (MFIs) are at the forefront of providing financial services to the low-income population<\/strong><\/big><\/span><\/p>\n

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\n\"\"Many Sri Lankan migrant workers have lost their jobs, causing a reduction in remittance.\u00a0<\/span>
\nThis has affected the repayment of loans to MFIs as remittances are a key source of funds for many low-income households. According to Financial System Stability Review 2020, Central Bank stated that the NPL ratio of microfinance loans continued to increase from 2017 and reached 30% at the end of September 2020 from 17.3% at the end of September 2019. The NPL = non-performing loan is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full.<\/span><\/p>\n

\nMONLAR held a demonstration on International Women\u2019s Day, demanding the government fulfill President Gotabaya Rajapaksa\u2019s election pledge to scrap micro-credit loans. In parallel to the demonstration, the Collective of Women Victimized by Microfinance had started a Sathyagraha from March 8 onwards. Chinthaka said \u201cIn October 2019, then-presidential candidate Rajapaksa promised to scrap the micro-credit loans, which are causing acute problems to people. However, he is now silent on the matter.\u201d\u00a0<\/span><\/p>\n

\nTheir demands are as follows;<\/span><\/p>\n