Over 1.2 mln elders in Sri Lanka don’t have access to bank credit
Following the tsunami disaster in 2004 which caused devastation to life and property in Sri Lanka, the micro finance concept has taken a firm foothold in the country to build the lives of those who were severely affected by the tragedy.
Central Bank (CB) Assistant Governor D. Wasantha said the CB has forwarded a set of proposals to the Legal Draftsman’s Department on the Micro Financing Act which will soon be forwarded to the parliament for approval.
He was speaking at a seminar organised under the theme “Effectiveness of Microfinance for Senior Citizens” by Helpage Sri Lanka in collaboration with the Lanka Microfinance Practitioners Association and funded by the Tea Project.
He said over 1.2 million people are over 60 years old representing 9.3 per cent of the population of the country and they don’t have access to credit from banks.
He said the paths of the formal banking sector and the micro finance sector have gradually narrowed down over the years. Product differentiation was essential for the micro finance business to be successful. Micro finance can also make products cheaper and it can prevent entrepreneurs from falling into the hands of illegal money lenders. The CB’s role has been to facilitate micro finance business and educate people.
Executive Director of Helpage Sri Lanka Samantha Liyanawaduge said the net value of the micro finance sector is over Rs 60 billion and growing fast in the country with some 14,000 financial institutions involved in providing micro finance to entrepreneurs. He said micro finance institutions have been requested to provide micro finance to senior citizens of the country to alleviate poverty. Although senior citizens of the country are highly skilled in different spheres they do not have access to credit from banks. Most commercial banks and financial institutions do not provide financial assistance to senior citizens. The pilot project started by Helpage Sri Lanka that provided credit to senior citizens was successful as the repayment rate was 100 per cent. “If we do not provide financial credit to senior citizens to embark on self employment projects it could affect their livelyhood.” To provide financial assistance assistance to senior citizens Helpage Sri Lanka last year implemented a pilot project jointly with Berendina Microfinance institution and the repayment has been 100 per cent, he said.
Secretary – Lanka Micro Finance Practitioners Association D. Attanayake said senior citizens lack access to finance and were not able to obtain credit from banks. As a result senior citizens were the most affected by this move. Persons who are over 70 years find it difficult to obtain credit from banks which deprive them from engage in any business to supplement their income.
Secretary to the Ministry of Social Service, Ms. I. Rookwood said that steps will be taken by the ministry to provide relief to senior citizens by providing funds next year with the allocation of funds. Traw Le Hieu from Vietnam said that there was a remarkable similarity between conditions that prevail in Vietnam and Sri Lanka where the elderly was concerned. Vietnam even provides micro finance to grandparents of those who have been affected by HIV to keep their families afloat.