Micro-finance and Credit Authority Bill: Crying for Govt. help from under a heap of loans!

19 January 2024 12:01 am – 0      – 73

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  • Though people want to take loans they refuse to borrow money from microfinance companies and are now turning to microcredit organizations
  • Microfinance is qualitatively a different product from microcredit and the former is a big problem and it’s open to global capital


Several people affected by obtaining loans from mico-finance companies stages a protest recently at the Fort Railway Station demanding from the government to remove the Micro-finance and Credit Authority Bill. The protesters were representing people from different areas of Sri Lanka like Hambantota, Galle, Polonnaruwa and Ratnapura. 

Shiroma Sandamali is a mother of three children from Polonnaruwa, Hingurakgoda, Chandanapokuna. Her eldest child is 12 years old, the second is six and the youngest is 5 years old. Sandamali is one individual who alleges to have been victimised by these companies.

“I operated a shop. These companies approached me and said that I could obtain a loan from them worth Rs. 50,000. The first company that came forward was a company named ‘Sewa Lanka’. Initially I received Rs. 50,000 from them. After that, I was able to buy goods for my shop. They asked me to create a group of five people. After that we created a group. We had to pay a monthly premium worth Rs. 5000. After that, several other companies such as LOLC and Commercial Credits arrived in the village. We got loans from them as well because we wanted to improve our businesses and they were for agricultural purposes too,” said Sandamali.

She told Daily Mirror that she couldn’t settle the loans because she was unable to generate a harvest from the agricultural activities. She also referred to an incident when her neighbour, a woman, committed suicide due to mounting pressure and the failure of settling the loans. She was a mother of three school-going children.
“I also faced so many problems. Sometimes these company representatives would sit in front of my house from morning till night. There were countless times when I hid myself behind my house. We request everyone to give us relief for these problems,” said a worried Sandamali.

She emphasised that she no longer operates her shop. Due to the economic crisis and the COVID-19 pandemic she was unable to settle the loans and she couldn’t record any profit from

Protesters at Railway Station in Colombo raising their objections against the Microfinance and Credit Regulatory Authority Bill
Pix by Waruna Wanniarachchi


the shop either. She shared details of the pathetic situations faced by the victimised women.
“There are some women who were really helpless and I witnessed one incident where a woman had to start a sexual relationship with a company representative because she couldn’t find a way of settling the loan,” recalled Sandamali.

Finally, she said that though they received loans they didn’t have any knowledge of how to settle them at the time they obtained the loans from these companies.
Sandamali was one of the participants at the protest. The protest was organised by the Collective of Microfinance victims, Women affected by microfinance, Community Credit Organizations and Community based Women’s organizations.

Political Economist Dr. Amali Wedagedara said that there are fundamental problems if the bill is studied critically. This is because it has excluded the finance companies that have contributed to this crisis. She said that this microfinance crisis is ‘very real’. She emphasised that as a result of the bill women have been affected. These women have been affected physically, monetarily and they are emotionally distressed.

“There are other issues with the community based credit providers. This bill has totally ignored the difference in credit services that are available to low income people. There are at least two distinct categories: Microcredit and microfinance. Microfinance is a relatively new product when you make a comparison with microcredit,” added Dr. Wedagedara.
She said that these victimised people are experiencing a huge crisis. She emphasised that though these people have a need for credit they refuse to borrow money from microfinance companies. As an alternative they have been turning towards microcredit organizations. She explained that she sees so many fundamental problems in this bill.

“In the name of regulation they restrict taking deposits, they take away all autonomy and they impose microfinance on these microcredit organizations. It is a fundamental problem. You cannot do it because microfinance is qualitatively a different product from microcredit. Microfinance is a big problem and it’s open to global capital. Microcredit represents people’s own money. The other guys are tapping into the global finance network and really lending for profit,” explained Dr. Wedagedara.

She said that from the South Asian region Sri Lanka has the highest regulated interest rates. She compared Sri Lanka with a few other countries like India and Bangladesh.
“At the moment the regulated interest rate in Sri Lanka is 35% and it is the highest in South Asia. In Nepal the regulated interest rates is 15%., in India 24% and in Bangladesh it is around 24%. The interest rate in Sri Lanka is the highest,” Dr. Wedagedara.



 “There are other issues with the community based credit providers. This bill has totally ignored the difference in credit services that are available to low income people. There are at least two distinct categories: Microcredit and microfinance”
– Dr. Amali Wedagedara Political  Economist



She demanded from the government to get into the shoes of victimised people and look for solutions and propose an amended bill.
“I am not sure whether this bill can be amended. They should go back to the people. And they should go to the community based organizations too because this bill was drafted without consulting neither the victims nor the community based organizations. The government should go back to the people and engage in consultations. Then it will be a democratic process where everybody has his or her concerns addressed,” stressed Dr. Wedagedara.

She told Daily Mirror that the Police didn’t allow the protesters to march forward citing that what they were doing was illegal. The law enforcement officers had quoted a clause from the Police Ordinance and had affirmed that they cannot allow the protesters to continue marching forward.
“The police tell the same thing to everybody. They said that they will make arrangements for us to have a meeting with a senior officer in the Department of Treasury,” added Dr. Wedagedara.

She further said that the grieved parties would get an opportunity to speak with the Department of Treasury’s Legal Department’s Additional Director General A.K.D.D. Arandara.
“The meeting was very short and we were standing and speaking to him at the lobby. We gave him our documents which conveyed our concerns and demands. Then we demanded to be given a meeting. We tried to have a meeting with Minister of Finance Ranjith Siyambalapitiya and State Minister of Finance Shehan Semasinghe. Both ministers refused to comply with our requests. We asked Mr. Arandara to arrange a meeting with the Minister of Finance before the parliamentary debate. He said that he will let the authorities know,” concluded Dr. Wedagedara.
Our attempts to contact the State Minister of Finance proved futile.