Finance Watch

July 22, 2010 (LBO) - Sri Lanka's government is to set up a dedicated authority to regulate micro-finance institutions to make their supervision more effective, a government minister said.

A previous effort to regulate micro-finance institutions in 2006 through the central bank was abandoned because a separate, independent authority was considered more appropriate.

Micro finance has been identified as a vital sector in the economy because of its contribution to the growth of the rural economy and income generation.

The Cabinet of ministers has approved plans for a draft the 'Micro Finance Bill' to set up the Microfinance Regulatory and Supervisory Authority, minister Keheliya Rambukwelle said.

The proposed authority will license, register, regulate and supervise micro-finance institutions whether they are companies, non-governmental organizations or co-operative societies.

A large number of micro-finance institutions operated in the country without any regulatory or supervisory controls.