### TISL Warns of Loopholes in New Microfinance Law 📉

Transparency International Sri Lanka (TISL) has raised serious concerns over the recently passed Microfinance and Credit Regulatory Authority Bill, stating it fails to meet Supreme Court determinations and leaves vulnerable borrowers at risk. • Regulatory Gaps: The law defines "microfinance" only when the primary objective is "social empowerment." This allows large banks and leasing companies to offer identical small loans under a "commercial objective" to avoid the consumer-protection standards applicable to licensed microfinance institutions. • Lack of Borrower Protection: • No mandatory income verification or debt-to-income thresholds. • Absence of clear appeal mechanisms or guaranteed legal representation for borrowers. • Failure to recognize coercive recovery practices, including sexual bribery and corruption targeting women, as regulatory breaches. • Governance & Accountability: • No mandatory conflict-of-interest disclosures for the new Authority. • Inadequate transparency regarding funding sources and grants. • High concentration of discretionary power without sufficient oversight. • Economic Impact: The microfinance sector is a critical pillar for low-income households and women-led small businesses. TISL warns that "superficial amendments" risk leaving these communities exposed to predatory lending, hindering genuine financial inclusion and poverty Alleviation efforts.