Govt. to establish authority to regulate microfinance outifts

‘Interest rates range from 40% to 200%’

The government would establish an independent authority to regulate microfinance institutions, State Minister of Finance, Ranjith Siyambalapitiya told journalists yesterday (06).

The draft laws on the agency, i.e., Microfinance and Credit Regulatory Authority, had been approved by the Cabinet of Ministers, he said.

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.

The Microfinance and Credit Regulatory Authority Act would be presented to Parliament by the end of the year, he said.