July 22, 2010 (LBO) – Sri Lanka’s government is to set up a dedicated authority to regulate micro-finance institutions to make their supervision more effective, a government minister said. A previous effort to regulate micro-finance institutions in 2006 through the central bank was abandoned because a separate, independent authority was considered more appropriate. Micro finance has been identified as a vital sector in the economy because of its contribution to the growth of the rural economy and income generation.
The Cabinet of ministers has approved plans for a draft the ‘Micro Finance Bill’ to set up the Microfinance Regulatory and Supervisory Authority, minister Keheliya Rambukwelle said.
The proposed authority will license, register, regulate and supervise micro-finance institutions whether they are companies, non-governmental organizations or co-operative societies.
A large number of micro-finance institutions operated in the country without any regulatory or supervisory controls.