MICROCAPITAL BRIEF: Draft Law Would Cut Subsidies, Cap Interest Rates in Sri Lanka, Establish Microfinance Regulatory Authority

The Sri Lankan government recently released a new draft law to regulate microfinance, which would establish a Microfinance Regulatory and Supervisory Authority (MRSA) run by a five-person board of directors. The goal of MRSA is to “strengthen and develop and quantitatively improve the Microfinance business, to ensure its integrity and transparency, to maintain the confidence of stakeholders in the business, and minimize losses by establishing and enforcing standards of accounting, governance and disclosure for the microfinance businesses [1].”

The regulation provides that MRSA set “the terms and conditions under which deposits may be accepted, the maximum interest payable, the maximum length of time, and the cap on the amount one person may deposit, the terms and conditions, rate of interest and the time frame for any financial accommodation provided by an MFI [1].”

The regulation would bring an end to subsidized credit by shutting down the Credit Fund of the Janasaviya Trust Fund (JTF), which has been providing microfinance institutions access to credit for the past two decades. The regulation does not address sub-sectors such as microinsurance and micro-lending.

By Amira Berrada, Research Associate

Sources and Additional Resources:

[1] http://www.microfinancefocus.com/mffnews/microfinance-sri-lanka-future

MicroCapital.org story, September 21, 2011, “MICROCAPITAL BRIEF: YMCA Launches
Ymicro Website to Raise Donations to be Disbursed as Microloans in Colombia, Sri Lanka, Gambia and Liberia by YMCA Branches, Microfinance Institutions” https://www.microcapital.org/microcapital-brief-ymca-launches-ymicro-webs

MicroCapital.org story, July 9, 2011, “MICROCAPITAL BRIEF: International Finance Corporation (IFC), Microsave Publish Deposit Assessment Reports for Bangladesh, India, Nepal and Sri Lanka” https://www.microcapital.org/microcapital-brief-international-finance-cor

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Amira joined MicroCapital while working at Export Development Canada (EDC) as a Credit Insurance Underwriter. Amira holds a Bachelor degree in International Business and Finance from Concordia University in Montreal. While completing her bachelor degree, Amira spent a semester in France and upon graduation, three months in India working with non-governmental agencies, political and spiritual groups for various socioeconomic initiatives such as the advancement of women. While travelling to different cities and rural areas in India, Amira was touched by the poverty she witnessed and was dedicated to finding a way to intertwine her business interests with her passion for development. She hopes this internship in microfinance will provide the framework to integrate an element of development into her professional career as well as positively contribute to the field of microfinance. Amira speaks English, French, and Spanish fluently and has conversational knowledge in Portuguese and Arabic. In her spare time, she enjoys reading, trying new restaurants such as molecular gastronomy, restaurants made out of ice and Nicaraguan meals wrapped in banana leaves. Most of all, she loves to travel with loved ones.