Microfinance loans with soaring interest rates have left the community in Batticaloa trapped in a cycle of debt, reports The Hindu.
In a piece entitled “Getting sucked into a quicksand of debt”, villagers in the Eastern town described how microfinance loans have left many trapped.
“First, it was the tsunami that destroyed our community,” said one villager. “Then came the war. Now, it’s microfinance.”
Another spoke of how he was planning on selling his kidney to repay microfinance loans. “They say I will get LKR 8-9 lakhs (about ₹3.7 lakhs), but even that won’t be enough to fully repay our loan,” he said.
Those who are unable to pay back their loans face harassment by credit agencies. “One of them told me why don’t you die if you can’t repay your loan,” another local was reported as saying.
Women in particular have been targeted by microfinance companies – and subsequently face notoriously aggressive recovery agents hounding them for repayments.
In 2013, voluntary organisations in Batticaloa accused microcredit lenders of sexually harassing vulnerable female borrowers. Lending officials reportedly harass women for sexual bribes when they struggled with repayments.
See more from The Hindu here.