Rise Of Financial Institutions & Northern Province Debt Trap
Mithula Guganeshan
Indebtedness sharply increased within the Northern Region as the growth of average debt per family rises from Rs.52, 000 to Rs.194, 000. Thus, demonstrating the lack of proper financial education and the discipline required to be financially fit, crucial benchmarks for a successful life. Additionally, ADB report states that higher growth in credit from the private sector would be the key towards achieving sustained economic expansion due to tightened competition. Financial institutions needs to increase their credit growth from the private sector therefore aggressive marketing and campaigns are implemented to attract potential new clients. Any business with financially sound management would weigh their options before obtaining credit from the bank for further developments. Therefore, the obvious choice is to tap the financially illiterate small business owners, those easily buying into the idea of obtaining a loan in the hope of improving their businesses.
Most of the time, these owners are retail or wholesale businessmen and there is potentially no room for further growth in this particular sector within the Northern Province. Clearly justifies the extra ordinary levels of debt within the Northern Province and the number of awards won by the financial institutions for increasing the credit growth. In the end, as promised financial institutions has secured its own future and continues its development- oriented journey whereas the losses incurred by the common businessmen are hidden behind the financial institution’s big victories.
There are businessmen from the Northern Province who have lost millions as interests to these financial institutions and it doesn’t stop there, they have lost their businesses, properties, deposits, and in overall their lives. We need clarity when financial institutions promise us to be a partner for our business, because some partners tend to be interested only in their gains. Why don’t these institutions proudly communicate how they have contributed towards improving private sectors growth especially in the Northern Province, through their financial guidance, if there is any to begin with?Read More