Legal practitioners and activists launched a free consultation service to help victims of micro-finance debt at the Hingurakgoda District Court on Thursday. Volunteers undertook to help eight women initially who had been caught in the microfinance debt trap.
“Fifty cases related to microfinacing were taken up in court the same day. Forty of the 50 victims did not turn up or were not legally represented,” Director Program, Nelum Yaya Foundation Radhika Gunarathna said adding that this would be a plus point for the lenders.
According to Gunarathna around 15,000 organisations provide micro-finace loans to poverty-hit communities, especially women across the country. Most of the lenders are neither registered nor regulated and lend at an interest rate of over 220 percent.
In a report UN Independent Expert Juan Pablo Bohoslavsky said victims of micro-financing get trapped in multiple loans to pay off one using the money from the other. This has now evolved into a social issue with women being forced to provide ‘sexual favours’ to settle the debt and some women borrowers have even offered to sell their kidneys to repay loans.
The volunteer legal service for victims of microfinance was launched by activists and organisations including the Nelum Yaya Foundation, The Social Architect, Monlar, Law and Society Trust, Liberation Movement and Collective for Progressive Youth.