New Microfinance Bill Approved to Regulate Lending 📈

The Committee on Public Finance (COPF), chaired by Dr. Harsha de Silva, has approved the Microfinance and Credit Regulatory Authority Bill. This legislative move aims to overhaul the microfinance and money lending sectors to ensure stability and consumer protection. • Regulatory Oversight: The Bill establishes the Sri Lanka Microfinance and Credit Regulatory Authority. No individual or entity can operate a money lending or microfinance business without a formal license issued by this new body. • Digital Lending: The Authority’s purview explicitly includes online lending activities. All digital lenders must be licensed, addressing rising concerns over unregulated fintech platforms. • Interest Rate Caps: The Authority is vested with statutory powers to determine maximum interest rates for both lending and deposits, aimed at preventing predatory lending practices while preserving savings instruments. • Decentralization & Tech: To assist small-scale lenders, limited powers (such as application processing) will be delegated to Divisional Secretariats. The COPF emphasized the necessity of a robust IT system to manage this decentralized rollout. • Consumer Protection: A primary objective is protecting vulnerable borrowers. The Ministry of Finance has been directed to launch public awareness campaigns and FAQs to clear up mistrust regarding these legislative reforms. _Note: E-commerce operators are currently excluded from the scope of this Act._