Then as farce, now as tragedy: The second coming of Microfinance and Credit Regulatory Authority

THE Microfinance and Credit Regulatory Authority Bill that was defeated by communities affected by microfinance, women victims and community credit providers in April 2024, has reincarnated.

- BY SUNETH ARUNA KUMARA, RENUKA GUNAWARDENA AND AMALI WEDAGEDARA

The one gazetted in October 2023, with zero community consultations, was a joke. Instead of regulating big finance companies at the heart of the microfinance crisis in Sri Lanka, the Bill proposed regulating community credit providers. People protesting succeeded in stopping the Bill from moving forward. The amended version gazetted on 17 November 2025, is a tragedy, repeating the old Bill and missing an incredible opportunity to learn from community practices to formulate a pro-people regulatory framework, strengthen community financing, protect the rights of credit consumers, and curb profit-driven lending.

From a flawed interpretation to a flawed policy

The Bill that saw the light of day after five years of labour in 2023 was useless to begin with. Not only did it lack a clear vision for regulating the most necessary to be regulated and protecting credit consumers, but it also risked conflating community credit providers with illegal and usurious money lenders. Despite the prolonged struggle by women victimised by microfinance (since 2017), the drafters of the Bill had shown no sign of understanding the depth and breadth of the microfinance crisis, nor any inclination to propose the necessary regulations to safeguard people from predatory lending. The Annual Report 2019 of the Central Bank (CBSL), which the Supreme Court quoted in framing its determination (Box 13, p. 311-312), blames informal and undocumented moneylenders for multiple loans and over-indebtedness. While the problem of money lenders has been a perennial problem for low-income people, the modern microfinance problem is far from the creation of moneylenders. Both the Annual Report 2019 and the Supreme Court's determination on the Bill failed to capture the reality faced by low-income women trapped in multiple loans with big finance companies.