By: Staff Writer
January 29, Colombo (LNW): Behind Sri Lanka’s ongoing debate on microfinance regulation lies a deeper struggle over who controls credit, savings and community wealth.
At a national gathering of community savings practitioners last week, women from farming villages, war-affected regions and plantation estates described how debt has shaped their lives—and why the proposed Microfinance and Credit Regulatory Authority Bill fails to address that reality.
Suneth Aruna Kumara, speaking on behalf of microfinance-affected women in Polonnaruwa, described how collective organising has become a refuge for those trapped by high-interest loans and aggressive recovery practices. According to him, women who once lived in fear of debt collectors are now rebuilding their lives through shared savings and mutual support.
He criticised the proposed Bill for its lack of enforceable consumer protections, arguing that it does little to prevent a repeat of the microfinance crisis. “Regulation without safeguards only legitimises exploitation,” he said, noting that victims were not consulted in the drafting process.
The experiences of Malaiyaha women underscored the structural nature of indebtedness. Letchumanan Kamaleswary of the Centre for Equality and Justice explained how debt has been historically embedded in plantation life, binding generations of workers to estates through economic dependency. Despite strict controls on worker associations within plantations, microfinance firms operate freely, exacerbating household debt.
As a result, many women continue to work well beyond retirement age, servicing loans rather than building security. Kamaleswary warned that regulatory reforms which ignore such realities risk entrenching inequality.
Adding historical context, Pubudu Manohara from the Rural Development Foundation traced community credit initiatives back to State-led poverty alleviation programmes introduced in the late 1970s. Supported at various times by international agencies, these systems endured civil conflict, economic crises and natural disasters.
Yet, Manohara argued, international financial institutions have increasingly viewed community savings with suspicion. “There is fear of people controlling their own funds,” he said, suggesting that regulation is being used to centralise financial power rather than decentralise it.
Participants repeatedly raised concerns that excessive regulation could weaken women’s economic resilience, with ripple effects across households and local economies. A representative from Mullaitivu warned that economic disempowerment fuels social harm, linking financial stress to domestic violence and community breakdown.
The conference concluded with a call for meaningful consultation. Organisers urged the Government to engage directly with grassroots groups rather than relying on policy templates promoted by international lenders. Several speakers questioned the credibility of the ADB in shaping regulation, given its role in promoting commercial microfinance models now widely criticised for predatory practices.
For community organisers, the issue is not whether credit should be regulated but whose interests regulation ultimately serves.
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