The government will introduce a new Finance Regulatory Authority Act within three months to protect consumers against unauthorised lending.
Nelum Yaya Foundation Director Radhika Gunarathna said they have identified irregularities in the draft of the Act and offered their recommendations to rectify them. Some families are struggling to pay debts to ‘Microfinance Institutions’.
The Progressive Peasants’ Congress (PPC) said that at least 170 people have committed suicide as they had been unable to pay the debt for lenders.
Some 15,000 entities are believed to be engaged in microfinance business providing loans at an Interest rate of 20- 220 percent. However, less than 100 are registered institutions. The new Act aims to regulate all money lending entities and make registration mandatory.
Finance Minister Mangala Samaraweera recently told Parliament that the Ministry has written off loans from microfinance institutions of 45,000 women. He said 36,000 women were paid Rs. 94 million to redeem their mortgaged jewellery and loans to the tune of Rs. 736 million by 57,000 farmers were written off.