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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Thursday, May 04, 2006

Sri Lanka draws up new laws to regulate NGO's giving micro-finance

LBO: 21/04/2006"

Sri Lanka is drawing up a new law to regulate micro-credit organizations scattered around the county.

The legislation will cover thrift units operated by co-operative societies, thrift associations in the Samurdhi income support program of the government and other non- governmental organizations in the sector.

"At present no one knows how many NGO's (non governmental organizations) are involved in micro-finance or their asset base," says H M Gunasekera, Additional Director of Development Finance, of the Finance & Planning Ministry.

"The Department of Census and Statistics is conducting a survey with the Central Bank to assess how many are involved and their asset base."

Several thousand micro-credit organization scattered around the country not only lend to the public but also raise money from them.

Gunasekera says regularizing the institutions, taking them towards credit ratings would not only help the depositors but also give access to the organizations to get more funding.

Several international lending agencies led by the ADB, which is putting in 77 million dollars, are standing by with about 100 million dollars for micro-finance activities.

Developing the regulatory framework is also part of the project.

The German agency GTZ has pledged 4 million dollars, Italian Government 8 million dollars and the Sweden government 4 million dollars.

The government says many micro-finance organizations badly need management expertise, better infrastructure including information technology.

The proposed law would also impose audit requirements, and push the sector towards better corporate governance.

Gunasekera says the additional funding is expected to create 200,000 new micro-enterprises employing 250,000 persons.

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