Sri Lanka money lending and the micro finance businesses will be coming under strict regulatory control to protect customers and victims affected by illicit practices using iron fist tactics in the loan recovery process.
Credit Regulatory Authority Act will be enacted in parliament to provide for the regulation of the money lending and the microfinance businesses and to provide for matters connected it, including protection of customers of said businesses.
These details were revealed in a consultation paper on the proposed act released by the Central Bank
A Credit Regulatory Authority will be established with seven members comprising Secretary to the Treasury or his representative, as the Chairman of the Authority; the Deputy Governor of the Central Bank in charge of financial system stability; the Registrar of Voluntary Social Service Organizations and four other eminent persons with necessary qualifications and experience.
The main objectives of the Authority is to regulate and supervise licensed moneylenders; licensed microfinance institutions, coordination with regulatory authorities of Co-operatives, Samurdhi community development banks and entities formed under the Agrarian Development Act.
The authority shall issue appropriate guidelines on their regulation, supervision and consumer protection.
It will establish a mechanism to handle complaints from customers of licensees and maintain a database on such complaints; maintain a database on licensed moneylenders, licensed microfinance institutions and any other entity from which collection of information is enabled by this Act.
The Authority will issue licences and regulate persons engaged in the business of money lending and the business of microfinance; supervise persons engaged in the business of money lending and the business of microfinance.
It will also determine suitable policies for market conduct, supervision and regulations of licensees in line with market developments; coordinate with other regulators, Credit Information Bureau of Sri Lanka, and other stakeholders to implement a responsible lending culture among the licensees.
The other functions are the conducting of credit counseling for general public, and carryout financial literacy and awareness programmes ,establish a mechanism to handle complaints from customers of licensees and maintain a database on such complaints;
The authority will maintain a database on licensed moneylenders, licensed microfinance institutions and any other entity from which collection of information is enabled by this Act.
(LI)