Ceylon Federation of MSMEs calls for binding reforms to correct postcrisis lending practices

■Claims voluntary guidelines and temporary concessions have repeatedly failed to protect borrowers during crises Points to international shift away from bankcontrolled interest rate benchmarks Highlights need for greater transparency in Sri Lanka's own interest rate framework

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THE Ceylon Federation of Micro, Small and Medium Enterprises (MSMEs) has called for urgent structural reforms to the country's lending and regulatory framework, warning that flawed policy responses during successive national crises have disproportionately harmed small businesses while enabling excessive profit accumulation within the financial sector.

Addressing the media on Thursday, the Federation outlined a clear path forward, centred on corrective measures to address what it described as unjust interest recovery and weak regulatory oversight since 2022.

To ensure uniform and enforceable implementation, the Federation urged the Government to enact special legislation, if necessary, to give legal effect to these measures. It argued that voluntary guidelines and temporary concessions have repeatedly failed to protect borrowers during crises, highlighting the need for binding statutory safeguards.

Placing Sri Lanka's experience in a global context, they pointed to the international shift away from bank-controlled interest rate benchmarks, citing the abolition of the London Interbank Offered Rate (LIBOR) in the UK. Following revelations that major banks had manipulated LIBOR to boost profits at the expense of customers, UK authorities replaced it with the Sterling Overnight Index Average (SONIA), a transparent and risk-free benchmark designed to restore public trust.