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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