JICA Urges Stronger Lending Regulations to Protect Sri Lanka’s Vulnerable Borrowers

COLOMBO (News 1st); Kenji Kuronuma, Chief Representative of the Japan International Cooperation Agency (JICA), has emphasized the need for robust regulation and supervision of lending institutions in Sri Lanka to ensure meaningful financial inclusion, especially for vulnerable communities.

Speaking on the importance of balancing financial literacy with institutional accountability, Kuronuma noted that while educating borrowers is essential, it must be complemented by a regulatory framework that protects them from exploitation. 

Drawing on Japan’s own experience, he highlighted the transformative impact of the 2006 amendments to the Money Lending Business Act, which helped curb over-indebtedness and protect low-income individuals.

“These reforms in Japan regulated excessive interest rates, capped lending amounts based on borrowers’ income, and imposed strict penalties on unauthorized lenders,” Kuronuma explained.

Turning to Sri Lanka, Kuronuma acknowledged the ongoing review of the Microfinance Credit Regulatory Authority Bill, which aims to introduce proper oversight of lending institutions. He stressed that such a framework would not only safeguard borrowers but also support the sustainable growth of ethical lenders.

“The proper framework to regulate the problematic lender is useful not only to protect the vulnerable borrowers, but also to enhance the growth and expansion of the lenders with proper practises,” he said.