June 07, Colombo: Minister of Finance and Mass Media Mangala Samaraweera stated in Parliament today (07) that special measures will be taken this month to provide relief to women victimized by some microfinance institutions in the country.
The Minister was responding to MP Anura Dissanayake who proposed the Adjournment Motion in parliament today on the "Prevailing crisis in respect of Financial Institutions in the country".
MP Dissanayake proposing the Adjournment Motion said it is imperative to find an urgent solution for people to get their money back from crisis-ridden financial institutions and law should be strictly enforced against such institutions.
Agreeing with MP Dissanayake on most of the facts presented, the Finance Minister said the condition that these financial institutions and rural level micro finance companies set up is tragic.
He said the issue is serious in the North, North Central Province and the drought-stricken districts and mostly poor women have been targeted by these micro finance companies to the extent that two women in Jaffna have even committed suicide recently.
The Minister said attention has been paid to the situation and a solution has already been found.
He said it is necessary to form an independent committee irrespective of party affiliations together with the officials of the Central Bank and the Treasury to find a solution to the problem.
Even though some people have expressed various views in this House, the government fully trust the Governor of the Central Bank and its Deputy Governors.
He added that although there is no severe crisis in the economy, there are instances of instability in some institutions linked to the financial sector.
The Minister said there could be several reasons for the instability in some of the financial institutions. Lack of proper financial management, distributing loans with no far-sighted vision, poor management and fraudulent activities are reasons for the breakdown of these institutions.
Currently there are about 44 financial companies registered under the Central Bank of Sri Lanka. These companies accept the deposits from people and in addition provide leasing services and other loan facilities for them.
Because of the collapse of such financial institutions during the past decade, there were occasions the government paid public's money as compensation to the depositors, who lost their deposits
However, the Minister said it is necessary to assess how fair it is to pay the money allocated for the country's development and public welfare to compensate depositors who lost money due to the mismanagement or fraud in these financial institutions.
Minister Samaraweera said that a program called Sri Lanka Deposit Insurance and a Liquidity Support Scheme has been implemented and the program provides relief to small scale depositors.
"The law will be enforced against those who misused public funds. Bills should be amended and more legislation should be introduced. Attention has been paid to this," Minister said.
Minister Samaraweera further said that 155 directors of fraudulent financial institutions have been identified. Legal action has been taken against them.
There are legal provisions to liquidate the relevant finance companies after reparations were made to the depositors.
The Minister said a special relief for the women who have been trapped by micro-credit companies will be disclosed on June 22. According to the relief, the government will write-off the interest on loans under Rs. 150,000.
Under this proposal, women in all parts of the country will be given relief, the Minister said.