Minister Semasinghe instructs State banks to rescue rural people from microfinance trap

State Minister of Samurdhi, Household Economy, Micro Finance, Self-Employment, Business Development and Underutilised State Resources Development Shehan Semasinghe on Wednesday instructed the Regional Development Bank officials to be closer to the rural people by minimising delays to rescue people from the microfinance trap.

He said that the main reason for people to distance themselves from certain State-owned banks was the inefficiency in those institutions and emphasised that urgent action should be taken to get rid of such conditions.

The State Minister pointed out that the rural people were trapped in the debt trap of the microfinance institutions due to the poor performance of the State banks which are close to the rural people such as the Regional Development Bank.

Minister Semasinghe said this at a discussion held with the officials of the Regional Development Bank at its Head Office.

The minister inquired into the current functioning of the bank and instructed the officials to submit to him a report expeditiously containing solutions to the existing problems.

Increasing the financial literacy of the people to free the rural population from the microfinance debt trap was also discussed.

The Minister said that allocating funds, especially for organising workshops and lectures to educate the public, was a future investment and he was ready to assist in taking the necessary steps.

He pointed out that some State banks were trying to avoid lending to their customers rather than lending and added that the poor were affected by such action.

He emphasised the need for a State-owned banking system that would transcend the microfinance agents who take advantage of this inefficiency of State banks.

State Ministry Secretary Neil Bandara Hapuhinna, Deputy Secretary to the Treasury A.K. Seneviratne, Regional Development Bank Chairman Mahinda Saliya and others were present at the occasion.