Microfinance lenders to accept public deposits mooted

Tuesday, 20 October 2026 02:06 - - {{hitsCtrl.values.hits}}

MP Lakmali Hemachandra

Sectoral Oversight Committee focuses on expediting Microfinance and Credit Regulatory Authority Act implementation
Need to control lenders imposing excessively high interest rates through informal practices highlighted

Proposals to allow existing microfinance institutions to accept limited public deposits under regulatory supervision, simplify their licensing process, and facilitate access to lower-cost funding were put forward at a meeting of a Parliamentary committee, as the panel focused on expediting implementation of the Microfinance and Credit Regulatory Authority Act.

Microfinance...

The Sectoral Oversight Committee on Economic Development and International Relations, chaired by MP Lakmali Hemachandra, met recently at Parliament with officials of the Lanka Microfinance Practitioners’ Association, the Parliament Secretariat said yesterday.

The proposals emerged as discussions 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.

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 (ADB), to regulated microfinance institutions. Concessional funding is lending at below-market interest rates, typically from multilateral lenders.

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

The implementation of the Act’s consumer protection provisions, the time required to establish the Regulatory Authority, and the deadlines granted to institutions to obtain licences were also discussed.

The meeting was attended by MPs Lakshman Nipuna Arachchi, Sagarika Athauda, Kanthasamy Prabhu, Thilina Samarakoon, Wijesiri Basnayake, Suranga Rathnayake, and Sivagnanam Sritharan, along with officials from the Industry and Entrepreneurship Development Ministry.