The Hon. Thilina Samarakoon

¶ 01 Hon. Presiding Member, before I share my views on today’s Microfinance and Credit Regulatory Authority Bill, I must respond briefly to an Opposition Member who said we behave like Montessori or Grade 1 children, unfit for decent debate. If one watches the conduct of both sides, one can decide who actually behaves childishly. Even yesterday morning we saw unnecessary commotion and disorderly behaviour in this House at a level below that of a Grade 1 child.

¶ 02 Parliament should be the forum for serious debate to build a better country and society. Some Opposition Members do strive for quality debate, but at times that is not the case. Let them reflect on who are the juniors and who behave with maturity required in this Chamber.

¶ 03 On microfinance: Microfinance arose to empower communities, especially those without clear economic capacity, via time-bound programmes to strengthen them. Discussion in recent years focused narrowly on small loans, but microfinance encompasses far more. Key considerations include: - Providing credit, savings, and other financial facilities to poor people who cannot access formal banks. - Supporting low-income households to generate income and build capacity, and helping expand their income-generating processes. - Uplifting living standards through microfinance and enabling their contribution to national economic development.

¶ 04 We must ask whether Sri Lanka has properly regulated this sector. Debates occurred in 2016, 2019, and 2024, but without a conclusive outcome. This Bill seeks to provide that. If further amendments are needed, we are ready to bring them.

¶ 05 At the 2019 UN Human Rights Council 40th Session, microfinance issues were discussed, including the extent in Sri Lanka. It was stated that around 2.9 million people have been adversely affected, particularly in North Central and North Western Provinces, and over 170 people are reported to have taken their own lives due to microfinance debt.

¶ 06 The sector has created bitter experiences over time, particularly among rural, less-educated, and poor populations who face weaknesses in accessing formal banking. Therefore, we must bring informal microfinance under discipline. Some in the Opposition claimed we are targeting institutions only. We are not. While regulating institutions, we are also looking from the people’s perspective.

¶ 07 Through this Bill we intend to: - Establish a Microfinance and Credit Regulatory Authority. - Provide a strong regulatory framework. - Prohibit lending and microfinance business without a licence, so regulation is effective. - Introduce a client protection framework with clear procedures. - Provide investigatory powers to verify compliance. - Impose penalties for violations. - Impose limits on deposit-taking. Many institutions have gone to villages, taken deposits, and created hardship; this Bill will impose restrictions accordingly. - Where Central Bank powers are insufficient, this new Authority will act.

¶ 08 Concerns were raised that including community-based organisations would complicate their work. Community organisations such as death benefit societies and thrift societies are common. Our intention is to provide solutions if issues arise, and amend as needed. We bring this Bill from the people’s side, not to shield institutions or enrich them.

¶ 09 Regarding the need for a national microfinance regulatory mechanism, the Central Bank has noted the need to stop unauthorised deposit-taking, exploitative interest rates, and unethical recoveries; poor governance causes low recoveries, high costs, and losses. Unregulated deposit-taking threatens financial system stability. Therefore, this Bill is needed to ensure sector stability and protect the public with appropriate legal measures. With these points, I conclude.

¶ 10 Thank you for the time.