Opposition highlights plight of indebted people

• Says expansion of Debt Conciliation Board inadequate to deal with widespread problem

By Ashwin Hemmathagama – Our Lobby Correspondent

Opposition lawmaker Dinesh Gunawardena on Wednesday criticised the Government for failing to take action to reduce indebtedness in the country, particularly debt created by higher purchase schemes and loan sharks, calling for policies to mitigate impact on rural communities.   

Highlighting the possible limitations of the Central Bank of Sri Lanka to take action against unpaid debt, MP Gunawardena told Parliament that measures taken by the Debt Conciliation Board during the recent past are inadequate.

“Almost every village in the country is caught up in the short-term loan trap, especially the elderly.  Then there are the pensioners, those engaged in daily labour and housewives. All of them are caught in debt traps. Debt Conciliation Board had taken many measures during the past several years to reduce the backlog of cases pertaining to debt-related disputes. But it is doubtful whether this issue can be resolved by merely increasing the staff numbers,” he said.

According to Gunawardena, there are daily lenders in Pettah market who give Rs. 1,000 subjected to a daily interest of Rs. 100. “There are many unregulated loan schemes and some companies go to every village and town and sell goods on such schemes and in some instances, people have to pay around 40% in interest. The majority of those who get lured into such schemes are women,” he added requesting the Government to take quick action to regulate the industry.

The Government last year announced a program to write off debt from 75,000 women in drought-affected areas in about a dozen districts. The Government was to allocate Rs. 1 billion for the write-off.