NPC member Nadarajah calls for better micro financing in east
Monday, 7 April 2014 00:00
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Many financial institutions and Non Governmental Organisations (NGOs) are engaged in implementing loan schemes in the name of livelihood upliftment assistance and poverty alleviation since the end of the 30-year war.
The assistance is given on easy terms to beneficiaries with good intension but the purpose is lost and the results are adverse as they have not been given any training on how to start a business or use the funds to raise their living standards said a member of the National Peace Council Batticaloa S. Nadarajah.
The beneficiaries in most instances don’t use the money for purposes it was lent and experience difficulty in repaying the loans. When the bank issues the final warning they approach the local money lenders and get money on daily weekly or monthly interest rates to repay the loan and falls into the vicious cycle.
This is the plight of the innocent people who borrow from financial institutions who come to their door step with the intention of profit making. The main target of financial institutions is profit taking rather than assisting the people. He said that if the financial institutions are genuinely interested in helping the people they should first study the feasibility of the deserving cases and the status by considering the following aspects.
Consider how the repayment will be done.
Does the beneficiary have sufficient experience in the present employment?
Does the customer have proper funding?
Is the source of income legal?
Does the beneficiary have legal documents for this venture?
Does the beneficiary have experience in marketing?
Is there marketing potential?
He is of the view that if the beneficiaries do not fulfil the above mentioned conditions they can be rejected fully from a financial institution therefore be advised and guided on the following aspects
How to start a business?
How to manage it?
How to derive profit from the venture?
How to maintain records?
Study the marketing potential?
How to obtain legal documents for the venture?
The beneficiaries who are below poverty level and without any knowledge of employment or the production process involved in making the product will fail if they get borrow finances. Therefore they should be provided on the job training suitable to their abilities and be guided together with the financial assistance. In addition the beneficiaries can use the local raw materials or local resources for which they must be guided.
Prior to giving financial assistance, they should consider the plight of the affected people who suffered mentally and physically for 30 years and it is necessary to support them to enjoy a better life to achieve poverty alleviation and livelihood assistance.
Nadarajah is of the view that it is the sole responsibility of the lending institutions to ensure that they have knowledge about the business sourcing of raw materials as well as marketing and quality prior to giving them financial assistance.
