Sri Lanka to boost financial literacy in the North as indebtedness climbs
COLOMBO (EconomyNext) – Sri Lanka’s Central Bank will help boost financial literacy in the north as indebtedness grows sharply in the region, Governor Arjuna Mahendran said, opening a branch of the monetary authority in the region.
The Central Bank’s branch office in Kilinochchi, a one-time headquarters of Tamil Tiger separatists before a 30-year war ended in 2009, will provide central banking services to the region’s banks and provide Employee’s Provident Fund services to the public.
Governor Mahendran said Wednesday banks and non-bank financial institutions opened branches in the region after the war ended, expanding financial inclusiveness.
But indebtedness has also grown sharply.
The average debt of the average family has increased from 52,000 rupees to 194,000 rupees based on Central Bank surveys, he said.
Mahendran said the Central Bank will improve financial literacy by holding educational programs especially for low income families, bringing in experts to guide them on better borrowing techniques.
Interest rates were also high in the region, with personal credit going at around 20 to 30 percent, he said.
Regional Development Bank was now offering credit at 9.00 percent, he said.
Deputy Governor Ananda Silva said the branch will provide technical assistance to aspiring entrepreneurs and small and medium enterprises to prepare business plans and documentation.
Silva said the regional office also hoped to provide credit counselling services to individual borrowers helping them solve credit problems using the expertise of retired bankers who will help and intermediate with lending firms.
Economists and non-governmental agencies working in the north say indebtedness is becoming a problem as the people who were caught in a 30-year war and cut off from the rest of island are not equipped with sufficient caution when borrowing and getting into easy payment plans.
There is easy credit now in the North for anything from consumer durables to agricultural equipment to motorcycles.
In Sri Lanka motorcycles are more expensive than in other countries due to heavy taxation.
Motorcycles have improved mobility of lower income people throughout the world and empowered and given freedom and independence to women, especially in East Asia.
Sri Lanka’s high taxes imposed, by an elected ruling class who travel about in tax-free luxury cars and SUVs, on scooters in particular is preventing the independence of women in particular, freedom advocates say.