MICROCAPITAL BRIEF: Central Bank of Sri Lanka (CBSL) to Regulate Microfinance Institutions (MFIs)

The Central Bank of Sri Lanka (CBSL), the country’s central banking authority, recently announced a proposal to create a central authority that would be responsible for the supervision and regulation of the microfinance sector. Incidents of unethical recovery practices have been reported along with high transaction costs, high interest rates, poor repayment rates and large financial losses by microfinance institutions (MFIs). CBSL reported that the regulatory authority would be headed by one officer from CBSL, one officer from the Ministry of Finance and three additional officers that would be appointed by the Ministry of Finance. The authority’s role would include issuing licenses and setting capital requirements. MFIs in Sri Lanka that report to the Microfinance Information Exchange (MIX), the US-based nonprofit data provider, have aggregate loan portfolios totaling USD 270 million and total assets of USD 382 million as of 2009.

By Julie Moksim, Research Associate

About the Central Bank of Sri Lanka (CBSL): Established in 1950, the Central Bank of Sri Lanka (CBSL) is the nation’s central banking authority. The core responsibilities of CBSL are to ensure the stability of the nation’s financial sector as well as the economy as a whole.

Sources and Additional Resources:

Daily Mirror: “Microfinance Sector to be Streamlined Soon”, April 19, 2011, http://print.dailymirror.lk/business/127-local/41331.html

MicroCapital.org Brief, January 11, 2011: Microfinance Regulation in Sri Lanka to be Consolidated, https://www.microcapital.org/microcapital-brief-microfinance-regulation-in-sri-lanka-to-be-consolidated/

MicroCapital’s Microfinance Universe Profile: Central Bank of Sri Lanka (CBSL)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Sri+Lanka+%28CBSL%29

Browse the MicroCapital Universe and add your entry to: https://www.microcapital.org/microfinanceuniverse/tiki-index.php