Institutions providing microfinance services in Sri Lanka include: cooperatives (cooperative rural banks and thrift and credit cooperative societies), non-governmental organizations (NGOs), non-bank financial institutions (NBFIs), commercial and specialized banks, and regional development banks (RDBs). Informal/unregulated institutions also provide microfinance services, as does the government’s Samurdhi Bank Societies, which are regulated by the Samurdhi Authority of Sri Lanka. Banks and NBFIs are regulated by the Central Bank of Sri Lanka; cooperatives are supervised by the Department of Co-operative Development; and NGOs are supervised by the National Secretariat for Non-Governmental Organizations. A microfinance law, which will set up a separate authority to regulate and supervise microfinance institutions, is currently being prepared.
Microfinance & Banking
In Sri Lanka, consumer protection is addressed through a variety of methods, such as consumer education programs and complaint mechanisms. The Consumer Affairs Authority (CAA), which falls under the Ministry of Trade Commerce, Consumer Affairs & Marketing Development, is the main government institution mandated to protect consumers against unfair trade practices and safeguard fair market competition in Sri Lanka. Within the CAA, the Consumer Affairs & Information Division is responsible for promoting the establishment of consumer organizations and encouraging consumer education, which has mainly consisted of programs and competitions for school children and messages in the mass media. The Sri Lankan Legal Aid Commission, an independent statutory body, has a Consumer Protection Desk, which liaises closely with the CAA and conducts nationwide consumer awareness programs; it also gives legal advice to aggrieved consumers about seeking redress from the CAA.
In addition to consumer education programs, there are specific mechanisms to address complaints. The Compliance and Enforcement Division within the CAA investigates written complaints made by individual consumers or
consumer organizations, which must be filed within three months of receipt of the service. Many disputes are settled through discussion and negotiation, but may be referred to courts, usually magistrate courts, if an agreement cannot be reached.
Finance-related consumer complaints in Sri Lanka are usually referred to the Financial Ombudsman. With the concurrence of the Central Bank, the voluntary Financial Ombudsman scheme was established in 2003 by the banking industry, registered finance companies, leasing companies and others supervised by the Central Bank. The Financial Ombudsman pursues the satisfactory settlement and resolution of complaints made by bank and financial institution customers and is empowered to impose binding monetary awards on participating financial institutions.
Along with the Financial Ombudsman and the Compliance and Enforcement Division, there is a separate three-member Consumer Affairs Council (CAC) which is empowered to investigate allegations of uncompetitive practices and hear consumer complaints and is mandated to promote the interests of consumers in respect to price and quality of goods and services. A consumer has thirty days to bring a complaint based on a breach of the statutorily established implied warranty, which is a warranty that services are appropriate for a particular consumer. The CAC has the power to review decisions of the CAA.
The Credit Information Bureau of Sri Lanka (CRIB) also plays a role in consumer protection by collecting trade, credit and financial information on borrowers and prospective borrowers of lending institutions. This information is considered confidential and inappropriate disclosure is prohibited. A voluntary bank deposit insurance scheme was introduced in 1987 but is seldom used. The Central Bank announced in January 2010 that it will introduce a mandatory scheme in 2010 that will initially cover up to 100,000 rupees per depositor.
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