15 October, 2019

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Easy Access To Credit Triggers Violence Against Women In Sri Lanka

By Mithula Guganeshan

Mithula Guganeshan

Microfinance was introduced to provide affordable financial services to women from low-income households with an objective intended to finance income-producing activities, build assets, protect against risks and thereby fight against poverty. It is widely believed that microfinance would benefit the poor by eradicating poverty and result in financial inclusion, encourage savings, job creation, provide education, improve health & welfare and finally empower women.

However, evidence from research studies on Microfinance shows that there is a lack of robust evidence to prove the strong impact of microfinance on poverty alleviation and women empowerment (Duvendack et al, 2011). There is lack of quantitative assessment on Microfinance Institutions in Sri Lanka besides the biased results published by MFI’s. Due to ignorance or lack of sufficient understanding on the impact of microfinance, Government and policy makers fail to introduce solid measures to adequately monitor and regulate the microfinance industry.

Microfinance tends to target women borrowers as they are statistically proven to less likely to default. Nevertheless, borrowing a sum of Rs. 25, 000 would lead to Rs. 1,000 weekly repayments for 10 months resulting in an interest rate of 72% per annum. Such high interest rates loans were borrowed and used for consumption rather than any income generating activity. Unlike the rich or the middle class, women from poor backgrounds primarily borrow to meet their basic needs for survival especially food and shelter due to the lack of employment opportunities and marketable skills.

Women are subjected to domestic violence as micro loans are easily accessible and exclusively available only for the women. So, the men from low-income families are exploiting the opportunity offered and pressurize the women to obtain credit to finance household consumption along with their own personal consumption needs such as alcohol, tobacco etc. As a result female borrowers were unable to hold full control on credit. Opening channels to provide easy access to credit has resulted in tensions within the household leading to abuse and violence against women.

Men rarely take any responsibility or are held accountable to repay the installment once the money is used for household/personal consumption needs. Women are often subjected to humiliation and harassment by the credit officers as they are unable to settle their debts on time.

Therefore, women are increasingly facing gender oppression by institutions (representatives of the institution) within the public sphere as well. Generally, when it comes to violence against women greater emphasis has been given to violence against women inflicted within the domestic space by individuals involving personal relationships. Public humiliations by representatives from institutions are often under-reported where institutions are rarely held accountable for causing psychological and economical abuse on women. They are being subjected to insults and embarrassments as the credit officers are trained to collect the interests/repayments through any means.

Recent news on a suicide of a woman and her 2 year old baby from Northern Province displays the severity of the credit issue. The woman committed suicide following the visit of a loan officer requesting for the monthly payment of Rs.1, 900, which later resulted in an argument between the couple. Women in debt are subjected to violence within closed doors and harassed in public as well.

Microfinance has taken a detour from its original intention and objective, to alleviate poverty. Only a handful of microfinance institutions are charging low interest rates and working with the objective of alleviating poverty. The major flaw in microfinance is when the loans are offered without providing any training and expecting the vulnerable women to transform into successful entrepreneurs overnight. The irony is when majority of the graduates are working as employees whilst, the poor & uneducated women are expected to succeed as entrepreneurs overnight.

Measures to address the violence inflicted upon women

  • Regulate Interest Rates

Interest rates charged by Microfinance institutions need to be regulated. Interest free loans would be ideal if alleviating poverty is the key reason for the microfinance institution’s existence. There is a lack of transparency in the interest rates charged and the profit-motivated firms are misusing this situation which is adversely affecting poor women’s rights.

  • Training programs targeting both men & women

In a patriarchic society, a failed man’s ego will not allow the women in his household to succeed. Simply put, women’s power hurt the male ego resulting in violence within closed doors. Therefore, men from the low-income communities should be reached out and encouraged to be financially literate, save for their goals, build their own businesses or find jobs to cater to the family’s needs. More money in the hands of women in the presence of a failing man would trigger domestic violence and would never allow the family to escape poverty.

Rather than recklessly expecting women from low-income households to be entrepreneurs, microfinance loans could be provided combined with trainings on developing business skills, gender equality trainings etc.

Government and policy makers need to develop a comprehensive understanding about the microfinance industry and work towards re-designing laws & policies to explicitly prohibit & punish violence against women.

The article above has been written based on the research study conducted by the author amongst the Sri Lankan women from low-income communities holding micro-loans.

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Latest comments

  • 1
    1

    Or, and Im just spitballing here, how about we encourage these women to stand up for themselves and ask society to piss off from judging people’s personal lives? You can’t be absolved from personal responsibility just because you’re a woman- you decided to take out the loan at your man’s insistence. Is he at fault? Of course. He’s a failure using everyone around him like a leech. Is she at fault? Of course. She’s an adult that decided to trick a finance company to keep the peace at home. If divorce wasn’t such a taboo in this country, this wouldn’t be happening to begin with.

    As for interest rates, these companies need to pay their employees and have their own expenses. You can’t have interest free loans from the private sector- in that case, the government itself would have to do the lending with Treasury money: money we don’t have. Interest rates certainly do need to come down, but abolishing them is a pretty moronic idea.

  • 0
    2

    Thats exactly why microfinance institutions interest rates should be regulated. Finance institutions should not use any situtaion to make profit, its unethical and pathetic.

  • 1
    0

    Nothing like a dose of real life.

    If this is the experience of microfinance in SL then the model will have to be redrawn. One thing is for certain, finance companies will need to make a profit or suffer the inevitable, or register under the Charities Act.

    A bigger disaster would be if the state steps in and tries their hand. They already have a proven record of inability to organise even a piss-up in a brewery.

    • 4
      0

      Spring Koha

      “A bigger disaster would be if the state steps in and tries their hand. They already have a proven record of inability to organise even a piss-up in a brewery.”

      May I remind you the time when the restructuring the local cooperatives into Multipurpose Coops as resource centers for ruling party in the early 1970s under the weeping widows able ministers?

      Cooperative inspectors commanded the highest dowry value for any pecking order among Bridegroom market.

      My Elders tell me from food to bicycle tyre to sarong material, ………… could only be bought from Coops during the affluent rule of the weeping widow.

      I am sorry I have to remind you the Weeping Widow’s Glorious epoch.

      • 2
        0

        Native Vedda

        I know you didn’t mean to, but you have just invoked a nightmare from the past. Who can forget those days of 4 am bread queues and ‘jumping fish’, and our people wandered in the wilderness……..and then came JR!!!. So much hope. What pestilential times those were. Let no one forget.

        • 2
          0

          Spring Koha

          Hang on.

          Let SJ/Sekere to come up with his robust defense (bashing/blaming Tamils and UNP)of the weeping widow and some praise for her together with lot of glorification of her.

      • 2
        0

        NV,
        I still treasure an invoice for a new brake washer, which states ” Used washer surrendered” . Those were the (good old?) days.

        • 1
          0

          old codger

          Did the women folks applied to one of those new departments created by the the weeping widow and her able minister if they wanted to have legitimate babies?

          My elders told me every bit of necessity was rationed by the weeping widow’s enforcers.

          SJ/Sekere loves her to bits.

        • 0
          0

          Those were the (good old?) days.
          Another good old days.
          The carpet companies used to fit the carpet and leave behind reams of left overs or offer to cut them in to required size and edge them for various uses around the kitchen, bathroom, patio
          etc.

          Now days they fit the carpet and take the left over rolls with them for resale as cut rag and still charge the full price.

    • 1
      0

      In March 2017, the employees of Bangladesh’s Grameen Telecom (GTC), established by Muhammad Yunus, sued him over alleged unpaid dues.
      MicroCredit and Nobel Prize like Obama and Royingas Hillary and Bill friends of New york Bengalis.
      10 international awards because he said like Islam no interest loans.
      Blood is thicker than water How much 28% bengali in sinhalese.

      https://en.wikipedia.org/wiki/Muhammad_Yunus

  • 2
    0

    Microfinance,
    Bloody HelllLLLLLLLLLLL,

    Together you can put in line with
    Pirabaharan,
    Ma Ra ya Jarapassa,
    Hothambaya Jarpassa,
    Jarapassa Killer family.
    Heroin, Marijuana dealing and public money robing Politikkas,
    H I V and MICRO FINANCE.

    ALL ARE PEOPLES BLOOD SUCKERS!!!!!!!!!!!!!!!!!.

  • 0
    1

    This article is about people not accepting the reponsibility for stupid things they do. Instead, they accuse some one else.

    IT looks the author isfeminist, I mean a feminist who blame every thing at the man.

    Now the world is different, WOmen are no longer in living india under the rule of the man. Some how, women have to accept some responsibility.

    72% interest means, it is not legal microfinancing. Some one has borrowed money from the village – pawn whop like something.

    fortunately the govt was not accused here. Other wise, it should have been it is the Sinhala govt that is wrong and only the Tamilhomeland would have worked differently.

  • 0
    0

    Mithula.

    I do agree with you when you say……Rather than recklessly expecting women from Low-income households to be entrepreneurs…
    These are decent folks,but they do not have that craft or cunning to break away from that cycle of poverty.Those who patronise them with loans do not do so with their interests at heart.Is money the root of all evil Mithula?

  • 3
    0

    Thanks for the good article.
    I had my reservations about Microfinance from the time it was hailed as the cure all for rural economic problems.
    Even its limited success is based on social context.
    We live in a consumer society with very little production and massive export of labour, mostly female. The impact of labour export on rural society has been mostly negative.

    Banks and lending institutions are predatory and promote borrowing for consumption, mostly non-essential goods.

    Money management in rural households is affected by all such factors, including the demands of the young for the ‘good things in life’.

    This is a Third World problem in general and a Sri Lankan problem in particular since the country was dragged irreversibly into the open, liberal economy by JRJ’s regime with the privatization of nearly everything in sight the name of the game.

    There are no easy answers. The state and regional and local government need to play a monitoring role in these matters if not a preventive role.

  • 3
    1

    Yesterday Radio 4 BBc had something similar Where older folk are being robbed of their lives savings in bank accounts by scammers. The Barclay representative was being targeted by BBC demanding the bank to be responsible and reimburse. The sums are large so it’s important that the victim does not take things for granted (cared for society) and do something about it was the desperate response from the bank because there are shams linked to all these offers by folk than institutions itself negligence.
    A balanced article would have proved better than an emotional one to save woman. no woman at Sri Lanka who came to power really helped women but her own family- nepotism- it runs in the culture of impunity.
    Neither a borrower nor a lender be for a loan oft loses both itself and friend- Bard.
    Men would do better not trying to understand woman-
    woman can’t live with her and can’t live without her- oscar wilde

  • 2
    1

    In our ancestral home in Kandy, during the 50s and 60s when my Pater was alive, many people used to come to our home to borrow money.

    My Pater was pretty savvy in his dealings. For people who had land and small parcels of property he lent money with almost no interest as long as the Collateral were their properties.

    For people who had no land as collateral, if they male children, the boys often would be collateral. Failure to pay the loan means the boys would have to start working in our estate with no pay but just meals and a place to stay.

    For females he offered loans with low interest and almost no maturity date but I don’t know what the Collateral there was. With due respect to him, I will not comment on what the Collateral might be.

    I tried this same Money lending business back in the late 70s but gave up because I have a very violent temper.

  • 1
    0

    SJ

    “This is a Third World problem in general and a Sri Lankan problem in particular since the country was dragged irreversibly into the open, liberal economy by JRJ’s regime with the privatization of nearly everything in sight the name of the game.”

    Lets reintroduce severe form of exchange control, ban imports of raw materials, technology, machines, equipment, motor vehicles, computers telecommunication equipment (use pigeons, smoke signals, talking drums, marathon runners, …..), parts for equipment, rice, sugar, onion,….. a to z.

    Let praise the weeping widow for failed socialist policies and import substitution.

    Many more, ….. and then complain about colonialism, imperialism, neocon, ….. that this and everything.

  • 1
    0

    Unfortunately the world is male dominated. Lanka is no exception. The micro-finance will almost always get frittered away by other household members – one does not need researchers to say this.

    The micro-financing pioneered in Bangladesh was buggered by politicians. Where are you Muhammad Yunus?

    Micro-financing will work if corruption is bridled but a corruption-free society will not need such loans. A 101 example of Chicken and Egg.

    A small percentage of loans may be used wisely and for the intended purpose.

    • 1
      0

      We readily blame it all on the politicians. There is more to it.

      Many experiments work on a small scale.
      Then we identify only one or two parameters which we think are central and proceed to generalize on their basis and expand the scope of the experiment.
      It fails. We need explanations— easy comfortable explanations.
      So we skip addressing fundamental flaws.
      I remember reading Bangladeshi economists (of the Left) who were sceptical about the claims about Muhammad Yunus’ miracle solution. They were shouted down.

      Community-based self-reliant projects are most robust in a rural context. The cooperative movement of the North is such an example. It worked. Its state-dominated imitations in the South failed.

  • 2
    1

    There is no way a Man can lend money to a woman without comprising his ethics.

    If a Man refuses to lend money to a Woman he would be labelled as a discriminatory person against women.

    If a Man lends money to a woman and she defaults on her loan and he doesn’t forgive the loan he would be considered as unforgiving.

    If a Man lends money to a woman at low interest rates and ask for her Vagina as collateral he would be labelled a sexual predator.

    • 1
      2

      Rtd. Lt. Reginald Shamal Perera

      “There is no way a Man can lend money to a woman without comprising his ethics.”

      What did your parents think when they found your pockets are filled with loads of cash and sand? Did they punish you for being beach boy or did they encourage you or turned a blind eye?

      What did you do to sooth your sore bum?

  • 2
    1

    Rtd. Lt. Reginald Shamal Perera

    “There is no way a Man can lend money to a woman without comprising his ethics.”

    What did your parents think when they found your pockets are filled with loads of cash and sand? Did they punish you for being beach boy or did they encourage you or turned a blind eye?

    What did you do to sooth your sore bum?

    • 2
      2

      You modern day rif-rafs are a curse to the entire world. You rif-rafs must be talking to your Fathers and Mothers also like this. I am veteran of the Armed Forces of Sri Lanka who gave my life to save your sorry self when the LTTE fellas were coming to kill you all with their Sarongs up in the air.

      We saved your sorry selves from disaster and look at the way you shamelessly talk about me. If you can talk like this to me what you must be saying to your Parents must be unimaginable who after all are simpletons compared to an Army soldier like me.

      Fellas like you are what is so wrong with the world today.

  • 2
    0

    I have heard of instances where Recovery Agents of Micro-Finance companies visit the houses of those poor women and demand their V—-A in lieu of a write-off of the loan or further time for repayment.
    Micro-Finance breeds a vicious cycle.This Photo:to the essay by Mithula says it all!

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