Ninety percent of the rural poor had obtained loans from microfinance companies, National Movement of the Victims of Microfinance, Convener Nirosha Guruge said yesterday, addressing a press conference in Uva Paranagama.

“Most of the Microfinance firms are not registered and when they started giving loans, on a massive scale, we warned that this would lead to a crisis,” she said.

Guruge said that in many instances those who have been entrusted with collecting debt are demanding sexual favours from indebted women.

“So please regulate this sector. We have been demanding this for years. From the previous budget, the government promised to establish a regulatory body for microfinance. But it was not implemented,” she said.Guruge said that people have been manipulated into taking loans, sometimes at 120 percent interest.

She said that UN Special Rapporteur Tomoya Obokata on contemporary forms of slavery admitted that microfinance schemes, which disproportionately target women living in poverty in rural areas, often lead to high levels of indebtedness.

“By 2021, 2.8 million women were estimated to be trapped in unpayable debt, related to microfinance. The number has increased in the past year due to the financial crisis,” she said.