The Hon. Rohana Bandara

¶ 01 Hon. Presiding Member, we debate today the Microfinance and Credit Regulatory Authority Bill because, for years, people have suffered heavily due to microfinance, mainly for two reasons: - First, people’s deposits were unsafe; institutions collapsed and fled, leaving depositors abandoned. - Second, borrowers suffered immense pressure, especially women, damaging family structures, even leading to family breakdown. This became a national tragedy.

¶ 02 This Bill aims to protect those people harmed by microfinance. There are many institutions operating—some commercial, profit-driven ones must be managed differently and supervised properly. There are also many non-profit, community service-oriented bodies—death benefit societies, farmer organisations, women’s groups—whose goal is to build funds and serve communities without profit motives. These are run by volunteers who do not draw salaries. If such volunteer officers are subjected to heavy regulatory burdens, they will face undue hardship and these societies may be forced away from their community missions. Their small interest margins cannot bear paid management. Regulations must therefore give them relief, while ensuring abusive microfinance outfits are controlled and assessed with strict conditions.

¶ 03 This initiative began to protect women, so we propose mandatory women’s representation on the Authority—preferably on recommendations from the Ministry or Commission on Women and Children—because protecting women is central. The President has said we should move away from a “pawnshop” mindset. Some earn massive incomes through pawn-style thinking; instead we must act within a proper framework and not with a “we know best” attitude that ultimately yields no benefit.

¶ 04 In business practice, in villages we see vehicles obtained on lease or household items pledged illegally. Such practices are unlawful and a major cause of financial institution failures. Vehicles are dismantled and sold for parts without title transfer; this is a crime. Pawn brokers and similar outlets must be supervised by Police or relevant authorities to prevent accepting items where title cannot be proven or belongs to another financial institution. Otherwise we foster crime and place even lenders at risk of possessing stolen property.

¶ 05 Similar issues exist with jewellery shops accepting stolen chains; when thieves are caught, Police retrieve the pledged items and the jeweller never recovers funds. Law-abiding businesses must be protected. We must regulate microfinance effectively, identifying which institutions cause harm, while safeguarding mainline formal businesses and not simply shutting down small, village-level operations.

¶ 06 Farmers are severely burdened. Paddy is being harvested, but despite much talk, the Government has not implemented a fair procurement mechanism, leaving farmers under pressure. I remind the House to look after them as well. Thank you.