Parliamentary committees review draft Bill on Microfinance and Credit Regulatory Authority

Tuesday, 25 November 2025 01:59 - - {{hitsCtrl.values.hits}}

The proposed draft Bill to establish the Microfinance and Credit Regulatory Authority, intended to strengthen oversight of the country’s microfinance sector came under extensive discussion last week during several high-level Parliamentary committee meetings.

The document was reviewed on 20 November by the Sectoral Oversight Committee on Economic Development and International Relations, the Sub-Committee under the Ministerial Consultative Committee on Rural Development, Social Security and Community Empowerment appointed to address the microfinance debt crisis and the Women Parliamentarians’ Caucus.

The meetings were chaired by MPs Lakmali Hemachandra and Samanmalee Gunasinghe, with officials from the Central Bank of Sri Lanka (CBSL) and the Treasury Legal Department in attendance.

Officials noted that the initial draft of the Bill had been published in January 2024, after which several petitions were filed before the Supreme Court. The new draft incorporates amendments ordered by the Court, committee-stage proposals submitted by the Finance Ministry and other policy-related revisions. The updated gazette has now been prepared, with the Bill expected to be presented to the 10th Parliament.

According to officials, the primary objective of the legislation is to establish the Microfinance and Credit Regulatory Authority of Sri Lanka, which will oversee money-lending and microfinance activities, provide stronger customer protection, and repeal the existing Microfinance Act No. 6 of 2016.

A key point of discussion was the composition of the Authority’s proposed Board of Directors. Chair Lakmali Hemachandra highlighted concerns over the absence of representation for microfinance customers, noting that those directly affected should have a voice in the regulatory framework.

Members also stressed that women have borne a disproportionate share of the burden arising from unregulated microfinance schemes. They proposed including a representative from the National Commission on Women, the Women and Child Affairs Ministry, or the Secretary of the relevant line ministry on the Board.

Committee members also raised broader concerns regarding the social and economic harm caused by unregulated microfinance operations, which have led to severe indebtedness and community-level crises in multiple regions. They emphasised that the overarching purpose of the Bill must be to prevent such outcomes through firm regulatory oversight.

The Committee instructed officials to incorporate the necessary amendments into the forthcoming Bill, with the Treasury and Central Bank officials noting that further revisions could be introduced during the Committee Stage once the Bill is tabled in Parliament.

Members of the Sectoral Oversight Committee on Economic Development and International Relations, members of the Women Parliamentarians’ Caucus of the Parliament of Sri Lanka, Members of the Sub Committee under the Ministerial Consultative Committee on Rural Development, Social Security and Community Empowerment established to identify future steps to resolve the microfinance debt issue, and several officials participated in this meeting.