The new microfinance act has been formulated to bring in the informal sector into the regulated space. The policy shall work towards improved borrowing costs in the Small and Medium Enterprise sector along with the micro-finance sector.
State Minister of Samurdhi Shehan Semasinghe noted that the government had discussions with various stakeholders inclusive of the Central Bank and the Treasury to formulate the new policy.
Semasinghe was speaking on the webinar titled ‘Towards a People-Centric Microfinance Industry in Sri Lanka’ organized by the Lanka Micro finance Practitioners’ Association on January 20. The minutes of the webinar are to be submitted to the Samurdhi Ministry for further action. Semasinghe noted that there were public concerns with the costs of borrowing in the microfinance sector. Semasinghe also noted the important role the industry plays in providing credit to lower socio-economic groups.
Superintendent Central Bank of Sri Lanka Janaka Karunaratne noted that the main aim of the new act was to as much as possible formalize the operations of entities currently lending to lower socio-economic groups. Karunaratne noted that the lending that currently takes place in most cases falls outside the purview of the Central Bank.
The laws governing lending for entities outside the regulatory reach of the Central Bank are very old and do not address issues that have come about with the prevalence of the Micro-finance.The new act shall facilitate the registration of entities that are currently operating inthe market but that are not recognized by the Monetary Board.The industry discussed the need to bring micro-insurance products to the market.
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