Proposal to bring all microfinance and credit-providing institutions under single regulatory authority opposed

Representatives of community-based financial societies have opposed the move to bring all microfinance and credit-providing institutions under a single regulatory authority through the enactment of the Microfinance and Credit Regulatory Authority Bill.

According to the representatives the proposal could also potentially impact the role and operations of community-based financial societies.

These views were expressed when the Sectoral Oversight Committee on Economic Development and International Relations sought the views of representatives of community-based financial societies regarding the proposed Microfinance and Credit Regulatory Authority Bill.

Discussion in this regard took place when the Committee met in Parliament, under the chairmanship of Member of Parliament Lakmali Hemachandra.

During the meeting, representatives of community-based financial societies explained the role played by their societies and highlighted how they differ from microfinance and credit-providing institutions. They emphasized that community-based financial societies play a unique role in uplifting communities in rural areas of Sri Lanka, including empowering women.

Commenting on the matter, the Chairperson of the Committee noted that the Bill does not contain a separate definition for community-based financial institutions. She pointed out that regulating such institutions under a common set of criteria through a central authority could hinder their fundamental objectives.

Representatives of the community-based financial societies stated that while there is a strong need to subject their societies to regulation, it is important that any amendments to the Bill should not obstruct their core objectives.

After considering these views, the Chairperson proposed that the term “community-based financial institutions” be properly defined in the Microfinance and Credit Regulatory Authority Bill, and that necessary amendments be made to ensure their fundamental objectives are not adversely affected.

Accordingly, subject to these amendments, the Committee granted its approval to the Microfinance and Credit Regulatory Authority Bill. As the Bill also contains matters falling within the purview of the Committee on Public Finance, the Committee further decided to refer the Bill to that Committee for consideration, according to the statement issued by the Department of Communication of Parliament.