The Ministry of Finance of Sri Lanka has decided to withdraw the Microfinance and Credit Regulatory Authority Bill as the bill has failed to capture the policy that was intended to address the issues in society regarding micro-debt, Additional Director General of the Legal Affairs Department of the Treasury, A.K.D.D.D. Arandara said.

Speaking at the Committee on Public Finance (COPF) on Tuesday (2), he said that although the Supreme Court determination on the bill has provided legal clearance in line with the constitution, the Finance Ministry should revisit to see whether the policy intended to solve the microfinance issues are captured in the bill.

“Even if we include all the amendments proposed by the Supreme Court, we as the Finance Ministry have realised that we should revisit to see whether our policy to solve issues as intended is captured in the Bill,” he said.

He said that the proposed authority under the bill was set to look into the microfinance sector, which has the highest number of people involved at the village level even though the economic contribution of those loans is very small compared to other financial sectors such as banks and finance institutions.

He said that although the authority is brought to regulate microfinance, the other microfinance institutions do not come under it as there are other bodies to regulate them.

He said that three questions were raised at the meetings with the Finance Ministry on the proposed bill, one, being whether the microfinance institutions which are mainly responsible for the issues in society will be regulated or not even if the Act is passed.

Secondly, whether the microfinance bodies which are operating at a primary level in rural areas will have to face difficulties with the establishment of the authority and finally whether the authority will discourage the institutions which are providing credit financing for the SME sector and whether the SME sector will lose the possibility for receiving financing support.

“We realised that this bill got a large protest from the society and a higher number of amendments proposed to the bill than any other bill we have presented before,” he said.

He said that the treasury has appointed a committee with officers of the Central Bank of Sri Lanka (CBSL) to look into the bill again and consult with the stakeholders in making the bill comprehensive.