Parliament Committee urges speedy regulation of microfinance sector

The Sectoral Oversight Committee on Economic Development and International Relations has called for the speedy implementation of the Microfinance and Credit Regulatory Authority Act to strengthen regulation of the microfinance sector and protect the public from exploitative lending practices.

The Committee, chaired by MP Lakmali Hemachandra, made the call during a meeting with officials of the Sri Lanka Microfinance Practitioners’ Association at the Parliament complex, the Parliament Department of Communication said.

Committee members stressed the need to regulate informal lenders charging excessively high interest rates, which have placed a heavy financial burden on the public, while ensuring a fair regulatory environment for legitimate microfinance institutions.

The discussions covered the licensing of microfinance institutions, legal and practical difficulties arising from certain provisions of the Act, restrictions on accepting deposits and the cost of funds.

Proposals were made to simplify the licensing process for existing institutions, allow limited public deposits under regulatory supervision and facilitate access to lower-cost funding.

The Committee also considered establishing a mechanism to channel concessional funding from international institutions, including the Asian Development Bank, to regulated microfinance institutions to help reduce lending rates.

The implementation of consumer protection provisions, the timeframe for establishing the Regulatory Authority and deadlines for institutions to obtain licences were also discussed.

Meanwhile, the Committee considered the granting of mining rights for 68 grids to state-owned Lanka Mineral Sands Limited (LMSL) and measures to provide operational support to the company.

The Committee decided to issue the necessary recommendations on the matter.

LMSL has sought exclusive mining rights over mineral sand deposits along the northeastern coastline to prevent their allocation to other private institutions.

The discussions focused on ensuring a long-term and uninterrupted supply of mineral sands for value-added industries, particularly by utilising deposits along the eastern coast.

The Committee also considered attracting local and foreign investment for value-addition projects, in line with the Government’s policy of exporting mineral sands as value-added products rather than raw materials.

The review of previously issued mining licences, action against irregular licences and the transfer of relevant mineral deposits to LMSL were also discussed.

Officials informed the Committee that information on certain recently identified irregularities had been referred to the Criminal Investigation Department.

Members stressed the need to establish a multi-agency mechanism to ensure transparency and better coordination among institutions involved in the future issuance of mineral mining licences.

MPs Lakshman Nipuna Arachchi, Sagarika Athawuda, Kandhasamy Prabhu, Thilina Samarakoon, Wijesiri Basnayake, Suranga Rathnayake and Sivagnanam Sritharan, along with officials of the Ministry of Industries and Entrepreneurship Development, attended the meeting.