A parliamentary committee has called for faster implementation of Sri Lanka’s new microfinance legislation, seven months after the law received the Speaker’s endorsement.
The Microfinance and Credit Regulatory Authority Act, No. 9 of 2026, was enacted on March 20.
On October 19, Parliament disclosed that its Sectoral Oversight Committee on Economic Development and International Relations had examined the progress of implementation, including the establishment of the regulatory authority and licensing arrangements for microfinance institutions.
The committee, chaired by MP Lakmali Hemachandra, discussed the matter with representatives of the Sri Lanka Microfinance Practitioners’ Association.
The parliamentary announcement identified delays and practical difficulties requiring attention but did not publish a complete implementation timetable.
Legislation approved in March
Parliament passed the Microfinance and Credit Regulatory Authority Bill on March 4, 2026.
The Speaker endorsed the legislation on March 20, making it Act No. 9 of 2026.
The legislation provides for the establishment of a regulatory authority responsible for supervising licensed microfinance institutions and money-lending businesses.
Its stated objectives include consumer protection, regulation of lending activities and coordination with the Central Bank and other regulatory institutions.
Calculations by Lakbima News show that 213 days elapsed between the Speaker’s endorsement on March 20 and Parliament’s latest implementation announcement on October 19.
26 November 2025: Bill presented to Parliament.
4 March 2026: Bill passed with amendments.
20 March 2026: Speaker endorses Act No. 9 of 2026.
19 October 2026: Parliamentary committee calls for faster implementation.
The period between endorsement and the latest announcement is 213 days.
High-interest lending remains under examination
The committee discussed lending institutions that impose excessively high interest rates through informal practices.
Parliament reported concerns that these practices were causing financial hardship to borrowers.
Members emphasised the need for an effective regulatory environment capable of protecting consumers and supervising institutions operating in the sector.
The announcement did not identify individual lenders or provide a verified national estimate of borrowers affected by excessive interest charges.
It also did not publish the range of interest rates currently charged by informal lenders.
Such figures would require separate examination of lending agreements, institutional records and complaints received by regulators.
Lenders seek changes to licensing arrangements
Representatives of the microfinance industry raised several operational concerns during the committee discussion.
These included the licensing process for existing institutions, the cost of obtaining funds and restrictions on accepting deposits.
Proposals were made to simplify licensing procedures and permit regulated microfinance institutions to accept limited public deposits under supervision.
Allowing institutions to collect deposits would require appropriate safeguards for depositors and effective oversight of the institutions involved.
The parliamentary announcement records the proposal but does not indicate that permission for additional deposit-taking has been granted.
The committee also discussed the possibility of obtaining lower-cost financing from international development institutions.
The Asian Development Bank was identified as a potential source of concessional funding that could be channelled to regulated microfinance institutions.
Any reduction in borrowing costs for customers would depend on the terms of such financing and the lending practices of participating institutions.
Consumer protection provisions discussed
The implementation of consumer protection measures formed part of the committee’s examination.
Members also discussed the deadlines that institutions would be given to obtain the necessary licences.
These arrangements will affect existing lenders seeking to continue operating within the regulatory system.
For borrowers, effective supervision depends on the authority’s ability to monitor lending practices and enforce the applicable requirements.
Parliament’s October 19 statement does not establish how many lenders have applied for licences, how many applications have been approved or the current number of institutions operating outside the proposed licensing arrangements.
It also does not provide a confirmed date by which all relevant institutions are expected to complete the transition.
The legislation was intended to replace the earlier Microfinance Act, No. 6 of 2016, with a wider regulatory system covering microfinance and money-lending activities.
The committee’s latest proceedings show that the practical arrangements for implementing that system remain under parliamentary examination.
