Traders in North face dilemma as banks stop loans

[TamilNet, Friday, 14 September 2012, 15:55 GMT]
Eezham Tamil business community in the Jaffna peninsula and the Vanni mainland are in a dilemma as all Sri Lankan banks in public and private sectors have suddenly stopped issuing loans and also have increased the rate of interest to loans already issued by four percent. The entire business activity in the districts of Jaffna and Ki'linochchi has come to a grind halt, according to Mr.R.Jayasekaram, the president of the Jaffna Chamber of Commerce.

Several Tamil traders have closed their businesses as they are unable to repay the loans already borrowed from the banks, he told media at the office of a Traders Association held at Maanippaay on Thursday morning.   He added that the sudden termination of issuing loans to businesses is the starting point for the major economic crisis for the entire business community in the peninsula.   “More than one hundred and fifty branches of public and private sector banks are functioning in the peninsula. These bank branches were established after the war under the theme to provide livelihood assistance to people. However, these bank branches have not provided any social welfare facilities or livelihood assistance to the affected, instead they were functioning with the sole purpose of earning profit,” he said.

“Many traders with the loans obtained from these bank branches have already launched their business activities. But, the bank branches phased down the amount of loans issued to the traders six months ago. Now the branches have stopped providing loans completely,” Mr.Jayasekaram said.   Majority of business people have mortgaged their properties to these banks to obtain loans. Now they are left in the lurch to find money to run their businesses, he said.