2026-03-04 / Debate: Microfinance and Credit Regulatory Authority Bill - Second Reading and Committee Stage 2026-03-04
## Summary
Hon. Kanthasamy Prabu spoke in support of the Microfinance and Credit Regulatory Authority Bill, arguing it is necessary to address widespread abuses by microfinance institutions, particularly in the North and East following the end of the civil war in 2009. He described a cycle of debt trap affecting vulnerable populations—especially women-headed households—characterised by high interest rates, aggressive weekly collection, undisclosed loan terms, and compounding debt across multiple lenders, which he linked to rising suicide rates in his Batticaloa district; he noted that approximately Rs. 70 million of Rs. 100 million in district microfinance loans are currently in arrears, and flagged emerging risks from digital mobile lending apps. He called for the Bill's oversight mechanisms to complement Central Bank supervision and protect borrowers from both economic and psychological harm. In closing remarks unrelated to the Bill, he commended Sri Lankan Tamil artists' contributions to an Indo–Sri Lankan film production and expressed hope that the government would support the revival of Tamil cinema in Sri Lanka.
Hon. Presiding Member, today we are debating the Microfinance and Credit Regulatory Authority Bill. For years there have been many public criticisms on microfinance. As a government we see the need to address them through this Bill.
Microfinance was first developed in Bangladesh to identify small artisans in villages and provide them with small loans at low interest so they could grow economically, to support development by creating financial sources for village entrepreneurs.
You know microfinance targets the poor. After the war ended in 2009, this lending spread to the North and East because of the devastation from war and natural disasters and the urgent financial needs there. Women-headed households were particularly targeted, as were families of migrant workers in the Middle East. These loans carried high interest and weekly collection schedules. If a borrower defaulted, additional interest was imposed. Women took a microloan for an enterprise, could not repay, then took another loan from another institution, and so on — piling loan upon loan, ending up under huge pressure, mental stress, and sometimes suicide. In my district of Batticaloa, suicides have increased, and the harassment by microfinance institutions is a cause.
We have a responsibility to protect and give relief to the poor. In past years, elites — even ministers and MPs — had their own financial institutions and harassed people. Through this Bill we can monitor lending and savings by these institutions. Even if the Central Bank supervises, this Bill provides additional oversight. For example, when loans are given to poor people, signatures are taken on documents they do not understand, and copies are not provided. Later, hidden terms are used to demand extra interest, pushing them into crisis.
In Batticaloa District, about Rs. 100 million in loans were provided by microfinance institutions; Rs. 70 million is now in arrears. A new mode has appeared: loans via mobile phones. Recently, a health-sector employee who had borrowed through these digital apps died by suicide. This shows the negative impacts of digital growth.
Institutions created for a good purpose have now become a nuisance to people. Therefore, we must protect people from economic and psychological harm.
I also want to highlight our artists. Sri Lankan Tamil artists are now entering Indian cinema and succeeding. A recent Indo–Sri Lankan film, “Anthony,” with music by Ilaiyaraaja, has been made in Tamil, Sinhala and Malayalam, with investment from a person born in Sri Lanka, and it showcases our artists’ talents. We should develop Tamil cinema in Sri Lanka. Before the war it was growing; after the war, opportunities were few. Under a National People’s Power government, we will work for the welfare of Tamil artists. May the film “Anthony” gain international acclaim and bring pride to our country. I conclude. Thank you.