While the Indian Microfinance Regulation Bill is caught in hectic lobbying, Sri Lanka quickly moves to regulate it’s microfinance sector.
The Sri Lankan government has decided to set up a dedicated authority to regulate micro-finance institutions in Sri Lanka.This step was taken with a view to make their supervision more effective, a government minister said to the media.
Micro finance has been identified as one of the vital sectors of the economy because of its contribution to the growth of the rural economy and income generation among the lower classes. The Cabinet has approved plans for a draft of the ‘Micro Finance Bill’ which will enable the setting up of the Microfinance Regulatory and Supervisory Authority, minister Keheliya Rambukwelle said to the media.
The proposed authority will have the power to issue licenses, register, regulate and supervise microfinance institutions irrespective of whether they are companies, non-governmental organizations or co-operative societies. A large number of micro-finance institutions are currently operating in the country without any regulatory or supervisory controls.
A previous effort by the Sri Lankan government to regulate micro-finance institutions in 2006 through the central bank was abandoned because a separate, independent authority was considered more appropriate.