2026-03-04 / Debate: Microfinance and Credit Regulatory Authority Bill - Second Reading and Committee Stage 2026-03-04
## Summary
Hon. Upul Kithsiri spoke in support of the Bill to establish the Microfinance and Credit Regulatory Authority, arguing that the legislation is urgently needed to address exploitative lending practices in rural communities. He outlined the harms caused by unregulated microfinance, including interest rates as high as 400% annually, domestic conflict arising from loan repayment difficulties, and cases of suicide among women borrowers — particularly following the post-2019 economic crisis. Responding to Opposition criticism that the Government had merely "cleaned up files" before introducing the Bill, he countered that the Opposition had previously failed to act during their tenure, and that the delay had cost lives and destroyed families. He also briefly defended the Government's paddy price guarantee record, and acknowledged that adjustments could be made during implementation to address concerns about village voluntary associations, while affirming that the Bill must proceed without further delay.
Hon. Presiding Member, today we are debating the Bill to establish the Microfinance and Credit Regulatory Authority. It is important to understand why this Bill is brought. The main objective is to regulate moneylending and microfinance businesses and to provide relief to their customers.
In villages, microfinance has both positive and negative features. It emerged because people could not get formal loans through banks and financial institutions; they turned to easy-access loans. Positively, villagers formed groups and there was some communal solidarity. But negatives are visible: because of ease, rural people got accustomed to these loans and their poverty deepened. Some loans carry extremely high interest — 200, 300, even 400 percent annualized in some cases. Though they expect relief, these loans worsen poverty.
Another issue: sometimes loans are taken without even informing the husband in the family. When repayment becomes hard, domestic conflict arises and even family breakdown or worse can occur.
In 2019 and 2020, after the economic crisis hit homes, the reach of microfinance exceeded all limits. Women in small groups who could not repay even took their own lives. As a Government, we recognize these realities and had promised to protect people in such systems. Not only microfinance; many unregulated schemes charge excessive interest at large scale and cause great distress. That is why we bring this law.
The Opposition MP Chamara Sampath Dissanayake said we only cleaned up a few files before bringing the Bill. Even if so, it is our Government that has brought it now; you previously had the chance to act and did not. Some institutions move beyond “cleaning files” to “cleaning out the file,” and that is precisely why this law is necessary. Many lives were lost and many families destroyed because you delayed.
On a different point, Hon. Kings Nelson said paddy farmers are not getting a guaranteed price. I say: in the last season we gave the highest guaranteed price for paddy, and we acted clearly as a Government.
This Bill is good and must be brought. If delayed further, ordinary people’s documents could indeed be burnt in their hands, as the Hon. Member said. The Opposition is trying to create fear about voluntary associations in villages. If there are genuine concerns, we can discuss and, when implementing the law, make necessary adjustments. But this Bill must come. People need protection when dealing with these institutions, and institutions also need a clear framework. This is a further step toward a well-ordered economy. I conclude.
Thank you.