2026-03-04 / Debate: Microfinance and Credit Regulatory Authority Bill - Second Reading and Committee Stage 2026-03-04
Hon. Jagath Manuwarna spoke in support of the Microfinance and Credit Regulatory Authority Bill, arguing that regulation is urgently necessary to address the harms caused by an estimated 10,000–15,000 unregistered informal lending institutions operating without proper procedures. He cited alarming statistics, including 2.8 million microloan borrowers (2.4 million of them women) and approximately 170 reported suicides in 2019 linked to microfinance-related distress, a figure he believes has since doubled following the 2022 economic crisis. He addressed concerns that the legislation would affect community welfare organisations such as village death-benefit and farmers' societies, clarifying that the Bill targets commercial microfinance operators rather than voluntary community institutions, and noted that abusive debt collection practices—including confinement, intimidation, and sexual violence—have contributed directly to borrower suicides. He concluded that the Bill is essential to create a legal framework protecting both borrowers and lenders and to halt exploitative lending practices targeting the rural poor, plantation workers, and conflict-affected women in the North and East.
Hon. Presiding Member, on the Microfinance and Credit Regulatory Authority Bill, let me address a few points. My sense is the Opposition is not seriously opposing this Bill; most agree. Hon. Chamara Sampath Dissanayake said it would have been better 15 years ago; others said: act sincerely. Yes — sincerely, with people’s interests at heart. We do not bring any law to push people into danger or difficulty; the people know this.
Civil society has discussed these issues extensively. Research indicates there are around 10,000 unregistered, informal financial institutions in the country; some estimates say 15,000. Only a handful are registered with the Central Bank. Thousands of institutions are doing lending in villages without proper procedures.
We know those trapped by microfinance are largely the poor — rural labourers, plantation workers, and women in the North and East affected by war. It is said 2.8 million people have taken microloans in Sri Lanka; 2.4 million are women. In 2019, around 170 people reportedly took their lives due to related causes. We are now in 2026, after the 2022 economic crisis; I believe that number has at least doubled. To stop this, regulation is essential.
Some try to create unfounded fears in society. A “Mawbima” headline recently said, “15,000 village lending societies in crisis.” The Deputy Minister of Finance is here. We assure you: this law will not interfere with voluntary village organizations — death-benefit societies, farmers’ societies and similar; those cultural institutions help manage community affairs. Money exchange in such societies is for village welfare. Microfinance companies are different.
The world knows microfinance through Bangladesh’s Prof. Muhammad Yunus. It was piloted there, and later found to be problematic; research in several Indian states also found failures. In Sri Lanka, despite failures elsewhere, microfinance lending continued, worsening people’s lives. Microfinance was intended to support the most marginalized with no collateral who cannot prove income to a bank. But the purpose has shifted. Our poor, especially women, have been pushed down further. Profit-seeking has harmed lives. Therefore, regulation is vital — to protect both borrowers and lenders, to create space for legal redress. That is why an Authority is needed.
We also know a licensed bank does not come to your house, sit on your chair and refuse to leave until repayment; they do not block you from leaving the house, commit sexual violence, threaten or terrorize. But microfinance collectors have done such things here. That is why so many suicides have been reported. You can find documentary evidence online: women recount how collectors sat all day, and how women, terrified, took their lives. Collection practices went beyond ethical limits. With this regulation, we can stop that.
We are also a Government that supported low-income families affected by the Ditva cyclone with significant relief, because protecting lives and improving living standards is our duty. If profiteers still prey on them, we must intervene — not by terrorizing institutions, but by putting a proper framework in place. This Bill is important for that. I conclude. Thank you.