Finance Min calls for new regulatory body for Microfinance industry

Aug 03, 2018 (LBO) –  Sri Lanka’s Finance Minister said that he is proposing the establishment of a new microfinance regulatory authority together with mandatory registration for the companies and amendments to the Act.

“This is a national tragedy. It needs to be addressed in layers,” Mangala Samaraweera, Minister of Finance told reporters in Colombo, Thursday while explaing the the newly announced Micro-finace relief programme to write off loans for 75,000 women across 12 districts.

“The government felt it had an inherent moral duty to intervene and this is why the Government has allocated one billion for the write-off to be rolled out in collaboration with the Microfinance Practitioners Association.”

Amending the Microfinance Act, making it mandatory for microfinance companies to register with the Government and introducing a new regulatory body for the industry are measures under consideration, the Finance Minister said.

Women who have taken loans of 100,000 rupees or less and defaulted on their payments in three months before 31 June 2018 will be eligible for this scheme.

All the companies that partake in the write-off will also have to cap interest rates of future or new loans at 35 percent, the minister added.

The Finance Ministry will begin releasing letters supporting the write-off to companies in September.

The progam covers the districts of Trincomalee, Ampara, Batticaloa, Jaffna, Mullaitivu, Kilinochchi, Vavuniya, Mannar, Kurunegala, Puttalam, Anuradhapura and Polonnaruwa.