Recent News

Members of coopertive societies take to the streets

Over 3,000 members in 100 cooperative societies took the streets of Jaffna yesterday, in protest against the increasing debt situation in the lives of many in the North due to unscrupulous activities of microfinance companies in the area. They marched to the District Secretariat in Jaffna to hand in a letter seeking the government's intervention on behalf of them to control the high debts in their society. The protestors also went to the Governor’s Office where they handed in a letter addressed to the President along with their demands.

They demand that: all microfinance companies that use unethical and illegal practices be banned, an interest rate cap with an effective annual interest rate not exceeding 25 percent be imposed, so that all predatory loan schemes are immediately stopped, cancel all existing predatory microfinance loans or provide a moratorium for two years necessary to restart sustainable economic activity and expand low interest government credit schemes that could generate sustainable rural livelihoods and rebuild the economy.

Jaffna District Cooperatives Council's Secretary, Vethavalli Selvaratnam, speaking to the Daily News, said many finance companies go into villages and provide loans at high interest rates, often creating a cycle of debt for those who take on the loan.

The members of cooperatives have stated that they could offer the people more sustainable forms of credit if they were supported more and strengthened by the government.

Selvaratnam asked that the 2018 Budget allocation for cooperatives be made available as soon as possible, so that they could offer an alternative source of credit to people.

Jaffna District Thrift and Credit Cooperatives Council Union, Secretary, Kanakambigai Jegarajah in the meantime, said their Co-Op's system ensured that loans are given at low interest rates.

It is more systematic. But when people go and take loans from microfinance companies and they are unable to pay them back, it affects our payback periods too, he added.

The Jaffna District Cooperatives Council headed by T. Suntheralingam in its statement observed that since 2009, indebtedness in the Northern Province was growing at an alarming rate. The lack of opportunities for employment and sustainable livelihoods, have led to microfinance companies charging exorbitant interest rates and effectively acting as loan sharks. They mainly target rural women with annual interest rates ranging from 40 - 220 percent, the statement read.