Sri Lanka money lending and the micro finance businesses will be coming under strict regulatory control to protect customers and victims affected by unauthorized practices.

Credit Regulatory Authority Act will be enacted in parliament to provide for the regulation of the moneylending business and the microfinance business and to provide for matters connected therewith or incidental thereto, including protection of customers of said businesses.

These details were revealed in a consultation paper on the proposed act released by the Central Bank of Sri Lanka recently.

A Credit Regulatory Authority will be established with seven members comprising Secretary to the Treasury or his representative, as the Chairman of the Authority; the Deputy Governor of the Central Bank in charge of financial system stability; the Registrar of Voluntary Social Service Organizations and 2 persons nominated by the Minister of Finance, another 2 nominated by the governor of the CBSL with necessary qualifications and experience.

The Authority shall meet at least once in every quarter of each financial year.

The main objectives of the Authority is to regulate and supervise licensed moneylenders; licensed microfinance institutions, coordination with regulatory authorities of Co-operatives, Samurdhi community development banks and entities formed under the Agrarian Development Act and issue appropriate guidelines on their regulation, supervision and consumer protection.

In the exercise of powers, duties, functions and responsibilities under this Act or any other written law, the Authority shall have power to licence and regulate persons engaged in the business of money lending and the business of microfinance; supervise persons engaged in the business of money lending and the business of microfinance.

It will also determine suitable policies for market conduct, supervision and regulations of licensees in line with market developments; coordinate with other regulators, Credit Information Bureau of Sri Lanka, and other stakeholders to implement a responsible lending culture among the licensees.

The other functions are the conducting of credit counseling for general public, and carryout financial literacy and awareness programmes ,establish a mechanism to handle complaints from customers of licensees and maintain a database on such complaints; maintain a database on licensed moneylenders, licensed microfinance institutions and any other entity from which collection of information is enabled by this Act.