Microfinance institutions should temporarily lower their interest rates, waive loan repayments and defer property foreclosures for the next six months in order to ease the burden on families affected by recent flooding, the opposition CNRP said Thursday.
Thousands of families across the country are struggling to repay loans as a result of the devastation to their livelihoods caused by the floods, CNRP lawmaker-elect Mu Sochua said at a press conference at the party’s headquarters.
“Taking into consideration the effect of the stress of indebtedness and the threat of the removal of valuable assets from vulnerable people, it is firmly suggested that further stresses placed on people be remediated as a matter of urgency,” she said.
At least 168 people died during more than a month of flooding, and a total 1.7 million people were affected by the disaster, according to the latest figures from the National Committee for Disaster Management.
The “rights-based approach” to money lending that the CNRP is proposing for the country’s 37 microfinance institutions—which have combined loan portfolios of more than $1 billion—is that they give customers a six-month reprieve on loan repayments, lower interest rates to 1 percent (from a minimum 2.5 percent) for one year and remove the threat of repossession to allow time for reconstruction.
“People are starting to leave for Thailand to find work to pay loans or escape payments [so] these measures are crucial to allow for the recovery, repair and reconstruction of livelihoods,” Ms. Sochua said.
Contacted Thursday, Mey Vann, director of the industry department at the Ministry of Finance, said that the government was making the same appeals to the microfinance industry to help the victims of flooding.
“We also are asking that among other things the period of payback be extended—but we don’t have the right to enforce any policies on the industry as this is not the government’s money, so we are seeking an understanding with them and are urging them to act in their customers’ best interests,” he said.