The Hon. (Mrs.) Sagarika Athauda, Attorney-at-Law

¶ 01 Hon. Presiding Member, microfinance has long been familiar globally and in Sri Lanka via cooperatives and rural banks, later expanding through private institutions and NGOs.

¶ 02 Features like quick, collateral-free, small loans embed microfinance in rural economies. Expected outcomes include self-employment expansion, small enterprise start-ups, rural economic activation, and women’s economic empowerment.

¶ 03 However, rising demand and inadequate practices produced social tragedies. While precise nationwide data are lacking, around two million are said to be affected, and approximately 200 suicides linked to microfinance debt have been reported. Reasons include exorbitant interest, with women disproportionately harmed—forced to sell assets and endure harsh recovery actions, leading to family breakdown, education disruption, property loss, and even death. Post-war (2015–2018), the North and East faced acute crises.

¶ 04 Although the aim was to expand livelihoods and stabilise household economies, many loans funded daily consumption—housing, food, living costs—without adequate ex-post assessment, fuelling a debt cycle: taking a new loan to service an old one, increasing principal and distress.

¶ 05 Therefore, regulation is necessary to protect both lenders and borrowers. Without repayment, institutions fail; without access to credit, borrowers suffer. This Bill protects both.

¶ 06 We expect structured regulation, supervision, licensing rules, broader oversight, market conduct policies, and a lending culture with coordination among institutions. Public education on credit counselling and financial literacy is essential, as is a strong complaint and redress mechanism.

¶ 07 Overall, Central Bank-guided frameworks should operate, so microfinance is orderly and both sides are protected. Alongside regulation, we need programmes to strengthen the rural economy—such as Praja Shakthi-style initiatives to engage communities in productive activity.

¶ 08 The Bill’s overarching aim is to establish a sound, ethical, regulatory and supervisory framework for lending and microfinance businesses, enabling low-income clients to achieve intended social and economic development within a safer environment. I conclude in support.

¶ 09 Thank you.