Tensions came to the fore following a meeting held on March 26 at the Prime Minister’s Office, attended by Prime Minister Harini Amarasuriya, Chairperson of the Sectoral Oversight Committee on Economic Development and International Relations MP Lakmali Hemachandra, and representatives of community finance groups and civil society.
The discussion focused on the ongoing microfinance crisis and the impact of the new legislation on community-led financial systems. While the Government signalled willingness for continued engagement, participants described the meeting as inconclusive.
Representing the National Collective of Community-Based Savings and Credit Service Providers, Suneth Aruna Kumara expressed frustration, claiming authorities appeared disconnected from grassroots financial realities. He criticised the lack of recognition for long-standing community finance systems and raised concerns over the Government’s request for the collective to generate data and conduct surveys.
Kumara also questioned assurances that concerns would be addressed during the regulatory drafting phase, noting the absence of clear solutions. He said the collective’s request for exemption from the new law had not received a definitive response.
Researcher and feminist political economist Amali Wedagedara also described the meeting as unsuccessful, criticising both its timing and conduct. She noted that stakeholders had sought engagement prior to the passage of the law but were only consulted after it had already been enacted, limiting meaningful input.
Responding to the concerns, MP Hemachandra said the Government acknowledged the complexity of regulating a diverse sector and remained open to revising the law before it becomes operational. She said a key challenge lies in defining community finance and confirmed that a concept paper would be developed collaboratively to better categorise such entities.
She added that variations in the scale of community-based organisations—from small informal groups to large entities managing billions of rupees—make uniform regulation difficult. However, she assured that there remains a window to address shortcomings before implementation.
The Microfinance and Credit Regulatory Authority Act No. 9 of 2026 came into force on March 20 following certification by Speaker Jagath Wickramaratne.
The law establishes a regulatory authority to oversee money lending and microfinance institutions, with the aim of strengthening consumer protection and regulatory oversight. It also repeals the Microfinance Act No. 6 of 2016 and introduces provisions for coordination with the Central Bank of Sri Lanka and other regulatory bodies.
