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Women’s group urges Govt. to enact law to address predatory practices in microfinance lending
View(s):A women’s group advocating for economic rights has called on the government to enact legislation to address the “predatory and exploitative practices associated with microfinance lending”, adding that interest rate caps, restrictions on access and activities of microfinance companies and strong consumer protection practices can curb ongoing violence and exploitation.
“The National People’s Power (NPP) marked the completion of its first year in government in September 2025. Sadly, the new government has already lost touch with the realities on the ground,” the Feminist Collective for Economic Justice said in a statement this week.
The Collective said its experiences working with grassroots women’s groups have revealed an overall degeneration of people’s lives “in the face of harsh austerity policies the NPP has chosen to continue”. Citing several case studies, it pointed out that poor working-class households, be it in rural agriculture and fishing communities or the urban working class, are caught in “a debt-trap system”.
“As the economic crisis at the household level deepens, households are financially depleted,” the statement held. “Low wages, austerity-driven high costs of living and inadequate state support and state protections from exploitation have created perfect conditions for a growing and exploitative microfinance loans sector.”
It said women were borrowing first from neighbours, then from loan sharks and microfinance companies, and using the money to pay off other exploitative loans. The extremely high daily and weekly interest-levying schemes may not require collateral, the Collective admitted. However, they “employ extraction by threat, physical and verbal abuse, intimidating family members, holding hostage bank cards, identity documents, and assets, and accessing phone contacts to intimidate by humiliation”.
“Some companies have called contacts, claimed that the borrower has named them a guarantor and demanded repayment,” it revealed. “A full range of personal, family and social assaults are exerted in the recovery of loans.” Some companies even use women’s homes as loan collection centres.
In 2016, the Microfinance Act No. 6 was enacted as a response to the growing unregulated microfinance providers, the statement recounted. “The Act failed to address many of the key concerns surrounding predatory practices and exploitation of vulnerability of the poor and was instead merely loosely regulatory,” it said. “The interest rate cap was effective to an extent to control the growth of microfinance.’
In January 2024, the interim government tabled the ‘Microfinance and Credit Authority Regulatory’ Bill in Parliament. It was challenged before the Supreme Court for failing to regulate large finance companies and to effectively address harmful practices. The Court determined that several clauses of the Bill were unconstitutional and can only be passed with a special majority in Parliament. The Ministry of Finance withdrew the Bill, following the determination of the Court.
Subsequently, a nine-member committee was appointed to review the Microfinance Bill and have public consultations at all levels. “However, no public consultations took place,” the Collective asserts.
In August 2025, the Cabinet of Ministers granted policy approval to present the new Microfinance and Credit Regulatory Authority Bill to Parliament. “At the time of issuing this statement, it was reported that the Bill has been gazetted; however, no such Bill is accessible on the government printer’s website for review,” the Collective points out.
The group has called on the government to initiate “a fair state-led debt relief programme and include necessary allocations in the upcoming government budget”.
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