Sri Lanka’s latest lending figures reveal a remarkable rise in financial support for women entrepreneurs through the formal banking sector, even as longstanding concerns surrounding the country’s wider microfinance industry continue to cast a shadow over efforts to promote inclusive economic growth.
According to the inaugural Implementation Report of the Women Entrepreneurs Finance (WE Finance) Code, women-owned and women-led micro, small and medium-sized enterprises held Rs.559 billion in outstanding business loans by the end of March 2026, accounting for 28 per cent of the total MSME lending portfolio reported by participating banks.
During the first year of implementation alone, women entrepreneurs secured Rs.145.5 billion in new financing, while nearly 46 per cent of all outstanding MSME loan accounts belonged to women-led businesses.
Launched in March 2025 with technical assistance from the Asian Development Bank, the WE Finance Code made Sri Lanka the first South Asian nation to adopt the international framework aimed at improving women’s financial inclusion.
Participating banks have also introduced a unified national definition for women-owned enterprises, enabling the Central Bank to collect gender-disaggregated lending data and formulate evidence-based financial policies.
These developments represent significant progress in expanding opportunities for women entrepreneurs operating within the formal economy.
However, the encouraging statistics also highlight another reality.
Thousands of economically vulnerable women remain outside the formal banking system, often lacking collateral, financial records or eligibility to obtain commercial bank loans. Many continue to depend on microfinance providers and informal lenders to finance agriculture, fisheries, cottage industries and household enterprises.
Recognising the need for stronger oversight, Parliament enacted the Microfinance and Credit Regulatory Authority Act, No. 9 of 2026, creating a dedicated authority to regulate microfinance institutions and moneylenders while replacing the previous 2016 law. The legislation seeks to improve licensing, supervision and consumer protection across the sector.
Economists note that the simultaneous existence of two very different credit ecosystems illustrates one of Sri Lanka’s most pressing financial policy challenges.
On one hand, formal banks are expanding lending to women entrepreneurs through structured programmes supported by regulatory safeguards and transparent reporting.
On the other, financially excluded borrowers continue to seek credit through institutions that have historically attracted criticism and demands for stronger regulation.
The coming months will therefore determine whether the newly established regulatory authority succeeds in strengthening public confidence while extending greater protection to vulnerable borrowers.
If effectively implemented alongside initiatives such as the WE Finance Code, the new regulatory framework could help narrow the divide between formal financial inclusion and the realities faced by thousands of women striving to build sustainable livelihoods
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