Title: Spiralling into Poverty, One Debt at a Time

Microcredit was initially promoted as a means of improving the conditions of individuals previously excluded from accessing financial services through investment in microenterprises. More recently however, it is observed that credit facilities which were meant to be invested in productive purposes, are in fact being used predominantly for consumption, as a means of survival in the face of trying circumstances, contributing to increased levels of indebtedness among its users - a majority of who are women. This essay seeks to understand the multiplicity of factors and circumstances that contribute towards the decision to borrow from microfinance institutes, as well as to understand the social and economic implications that result from increasing levels of indebtedness. The findings are broadly analysed within the context of Sri Lanka's Northern and Eastern Provinces, which were directly impacted by the armed conflict.