2026-03-04 / Debate: Microfinance and Credit Regulatory Authority Bill - Second Reading and Committee Stage 2026-03-04
## Summary
Dr. Pathmanathan Sathiyalingam expressed support for the Microfinance Bill while highlighting its particular significance for the North and East, where post-war displacement left populations vulnerable to exploitative lending practices by approximately 40 microfinance companies, resulting in debt cycles, abuse, and suicides, particularly among women-headed households. He raised concerns that the Bill's two-category framework — covering moneylenders and microfinance institutions — would inadvertently capture community-level, non-profit lending structures that were formed locally to support survival during and after the conflict, and argued that subjecting these to the same regulatory regime as commercial institutions would undermine their purpose. He proposed the creation of a distinct third regulatory category for community financial institutions, and called for meaningful women's representation on the proposed Authority, given that approximately 90% of those the legislation protects are women. The speaker submitted a document of suggested amendments to the House and concluded with remarks referencing ongoing unresolved issues facing war-affected communities in the North and East.
Thank you, Hon. Presiding Member. We welcome this Bill. It is essential for our country, because the North and East were among the worst affected by microfinance.
After the 2009 end of war, displaced people had lost everything and had no income. Over 40 microfinance companies from the South came to the North and East, targeted women-headed households with loans, and subjected them to various abuses — including sexual harassment — with very high interest and virtually no conditions. To repay one loan, women took another, and another; many could not cope and family heads took their lives. This has happened frequently in the North and East.
This Bill is needed to protect very vulnerable people and to bring microfinance and moneylending institutions under control. However, we see shortcomings. During and after the war, banking services were not fully available in our provinces, and even when available, many could not access them. Villagers formed community-strengthening structures, pooled funds, and provided small loans to those in dire need. These community institutions — often without profit motive — helped families survive and are still widespread in the North and East.
Our concern is that if such community institutions are brought under the same framework as big financial institutions, their original purpose will be lost, hurting poor families and women-headed households. Government Members said such small organizations would not be included, but the Bill divides institutions into two — moneylenders and microfinance institutions — bringing all within scope.
My advice: create a third category for community-level financial institutions, and tailor the law to their purpose. If they are not rigidly controlled under this Act, many families can benefit. Also, those protected by this law are 90 percent women, yet women’s representation on the Authority is minimal or only one. That is unacceptable. Ensure proper women’s representation. I submit a document with suggested amendments to the House and place it in the Library.
Sitting here today, I had to look around to confirm we are in the Sri Lankan Parliament. While people in our war-affected North and East still cannot return home, while families still do not know where their disappeared loved ones are, and while the stench of war has not faded, some come here and speak of humanity and war and killings. I end with that thought. Thank you.