The Sectoral Oversight Committee on Economic Development and International Relations has focused on the need to expedite the implementation of the Microfinance and Credit Regulatory Authority Act to ensure the proper regulation of the microfinance sector.

The Committee, chaired by Member of Parliament Lakmali Hemachandra, Attorney-at-Law, met recently at Parliament, where discussions were held with officials of the Sri Lanka Microfinance Practitioners’ Association on the matter.

The need to expedite the implementation of the Act enacted to regulate the microfinance and lending sectors was emphasized during the meeting. The importance of controlling lending institutions that impose excessively high interest rates through informal practices and cause hardship to the public was highlighted, alongside the need to establish a fair regulatory environment for properly functioning microfinance institutions.

Discussions also covered the licensing process for institutions engaged in microfinance activities, legal and practical challenges relating to certain provisions of the Act, restrictions on accepting deposits, and the cost of funds. Proposals were also put forward to simplify the licensing process for existing microfinance institutions, allow them to accept limited public deposits under regulatory supervision, and facilitate access to lower-cost funding.

Attention was also drawn to the possibility of reducing lending interest rates by establishing a mechanism to channel concessional funding from international institutions, such as the Asian Development Bank, to regulated microfinance institutions.