New Authority to regulate microfinance institutions

Finance State Minister Dr. Ranjith Siyambalapitiya said that a new authority is in the process of being established to regulate all microfinance institutions operating in the country. The State Minister stated this while responding to a question that was raised by the journalists during the press briefing while he was participating in the 2023 Youth Clubs Sports Festival Kegalle District tournament that was held at the Ruwanwella Public Stadium yesterday evening.

Dr.Siyambalapitiya said that even though there are currently around 11,000 microfinance institutions operating across the country, only five of them have been registered to operate legally.

Siyambalapitiya said that the existence of unregistered microfinance institutions implies that these institutions are being run without any control, adding that close to 3 million people who have been inconvenienced by microfinance activities have organised themselves together to take appropriate legal solutions to their common problems faced due to the malpractices committed by these unregistered microfinance institutions. The State Minister said that this issue has escalated to international level and therefore, registration of all these microfinance institutions is mandatory, and accordingly, these institutions are subject to the regulation and legal system of the Central Bank. All microfinance institutions and individuals who do not comply will be fined Rs. 5 million and have to undergo a prison sentence of up to five years, Siyambalapitiya added.

Siyambalapitiya further said that these microfinance institutions mostly deal with low-income people in rural areas, and the government has recognized the hardships and oppressive conditions faced by those people and has decided to initiate such a step to prevent them from experiencing further hardships.

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