Bill to tighten money-lending laws including microfinance

By Rathindra Kuruwita

The proposed Microfinance and Credit Regulatory Authority Bill will be presented to parliament in the second week of January, State Minister of Finance Shehan Semasinghe said on Friday (05).

“This bill will regulate the money-lending business and the microfinance business to provide protection for [customers of each],” he said, in a posting on X, formerly known as Twitter.

Semasinghe said this act will repeal the Microfinance Act, No. 6 of 2016.The new body was announced in October 2023 following a proposal by President Ranil Wickremesinghe in his capacity as Minister of Finance and it had been approved by the cabinet of ministers.

In November 2023, State Minister of Finance Ranjith Siyambalapitiya said about 11,000 microfinance institutions were operating in the country, but only five of them had been registered with the government.

About three million Sri Lankans had obtained loans from the microfinance institutions, Siyambalapitya said, adding that the effective annual interest rates of most microfinance companies ranged from 40% to 200%. That had become a serious problem for all borrowers, and some of them had committed suicide, he said.