Social activist Deva Krishnan
If we start this conversation with what is the latest situation of the microfinance crisis in Vavuniya ..
After the end of the war the people of Vavuniya now took loans from various companies to develop their economy. Before that we have to say that there was a system of lending like this in Sri Lanka. It is because of the disruption of that system under government institutions that people came into contact with these financial institutions. This used to be through Ceylinco Gramin. Many companies have been involved in this loan business since the war. Their branch size is much larger than the population of Vavuniya. These people gave loans to the competition. These companies have done a lot of damage by giving careless loans without considering the economic status of the people and the ability to repay the loans. At present about 75% of the families in Vavuniya have taken loans.
We did a small survey in one village. We spoke to 56 people. Except for 6, the remaining 50 have taken loans of over Rs. 10 million. They have no fixed income. People who work for hire. Their lands are not suitable for cultivation. About five companies have lent to one person. They do not even know the name of the lending company. These loans are called Monday Loans, Tuesday Loans, and Wednesday Loans. These people have been given loans without proper awareness. This is a great loss to the rural economy as well. Therefore, we have requested the government to develop low interest rate lending schemes through Samurdhi, Farmers’ Societies, Co-operative Societies etc. in the state machinery instead of such lending institutions. Microfinance loans are provided to reduce poverty. Therefore, companies cannot hand over this. Companies look at their development. There will be no rural development. If there is to be a rural economic development after the Kovid situation, the economic security of rural families must be ensured. According to the available data the country’s economy cannot be developed. We now see that the country’s economy is not developing when the rural economy and the family economy are disrupted.
What exactly is causing the rural economy to collapse like this?
One reason was that when the war ended and people returned to their villages, they had many problems. The government provided them with houses to resettle them. There was a problem there. 500 lakhs for some houses when houses are provided. But at least 8 1/2 lakhs will be required when those houses are completed. In addition, they work for a living. They are not able to work for hire while building houses. Then the money needed to pay for the food will be obtained from the house building money. In the end, there is not enough money to build houses. That’s where borrowing begins. Then you have to get more loans to pay off that debt. That is how they got into a debt crisis. Unable to repay the loan, he became poisoned.
Most of the people in Vavuniya are from other districts. They come from places like Sidambarapuram and Chettikulam and settle here. These people do not have permanent lands. If there is more land they can cultivate and become self-employed. There is no such situation. They do more hired work. Or working as manpower workers. When such people need money, there is no way to get a loan. When taking loans from government banks, a guarantee is required. In such a situation they are tempted to take loans from these microfinance companies. That is what causes these problems. Maybe I’ll get sick and not be able to pay my debts that week. Then you will not be able to repay the loan together. That way they face bigger problems afterwards.
How many people have committed suicide in Vavuniya so far?
As of now, there are only twelve. Autopsy reports of some deaths indicate that they committed suicide due to domestic problems. But the inability to repay these loans is what causes quarrels at home. In a village called Pandikethakulam, two years ago, a woman jumped into a well with her children and committed suicide.
What do you think is the solution to these problems?
Some people may say that what we are saying is wrong, that if we take a loan we have to pay it back, it is true. But there is a flaw in the lending system, or lending without proper investigation, which has put a lot of pressure on people. There is a big scam here. Some charge high interest rates. These problems are due to people being deceived and given high interest loans. Even women have no way out of this debt trap. Therefore, the government should intervene and take a decision to stop this lending immediately.