Microfinance Act

MICROFINANCE ACT

Arrangement of Sections

1. Short title.

2. Applicability of Act.

PART I

LICENSING OF COMPANIES CARRYING ON MICROFINANCE BUSINESS

3. Licensing requirement to carry on microfinance business.

4. Licensing procedure.

5. Form and duration of licence.

6. Licence fee.

7. Exhibiting the licence.

8. Board to maintain a register.

PART II

BUSINESS RESTRICTIONS ON LICENSED MICROFINANCE COMPANIES

9. Forms of business to be specified.

PART III

MANAGEMENT OF LICENSED MICROFINANCE COMPANIES

10. General superintendence.

PART IV

DIRECTIONS TO AND RULES GOVERNING LICENSED MICROFINANCE COMPANIES

11. Directions of the Board.

12. Monitoring compliance with directions.

13. Board may make rules.

PART V

FINANCIAL STATEMENTS AND AUDIT OF LICENSED MICROFINANCE COMPANIES

14. Financial year and audit of accounts of a licensed microfinance company.

PART VI

EXAMINATION AND SUPERVISON OF LICENSED MICROFINANCE COMPANIES

15. Examination and supervision of licensed microfinance companies.

16. Supervisory measures of the Board on licensed microfinance company.

PART VII

CANCELLATION OF THE LICENCE AND WINDING UP OF LICENSED MICROFINANCE COMPANY

17. Grounds for cancellation of a licence.

18. Procedure for cancellation of licence.

19. Winding up.

PART VIII

MICROFINANCE NON-GOVERNMENTAL ORGANIZATIONS

20. Non-governmental organization to apply for a certificate of registration.

21. Exhibiting the certificate.

22. Register of microfinance NGOs.

23. Registrar to make rules.

24. Duty to provide financial statement.

25. Registrar may examine books of accounts etc.

26. Powers of the Registrar.

27. Registrar’s power to cancel registration.

PART IX

PRINCIPLES, STANDARDS AND GUIDELINES LAID DOWN BY THE BOARD

28. Principles standards and Guidelines.

PART X

IMMUNITY FROM PROSECUTION

29. Immunity from prosecution.

PART XI

GENERAL

30. The Finance Business Act and Part IXA of the Banking Act not to apply.

31. Effect of other laws.

32. Restriction to carry on microfinance business.

33. Transitional provision.

34. Restriction on the use of the term “micro finance”.

35. Offences.

36. Board to be responsible for acts of officers.

37. Interpretation.

38. Sinhala text to prevail in the event of any inconsistency.

SCHEDULE

6 of 2016.

An act to provide for the licensing, regulation and supervision of companies carrying on microfinance business; the registration of non-governmental organizations accepting limited savings deposits as microfinance non-governmental Organizations; for the setting up of standards for the regulation and supervision of microfinance non-governmental organizations and micro credit non-governmental organizations and to provide for matters connected therewith or incidental thereto.

[Date of Commencement: 15th July, 2016]

1. Short title.

This Act may be cited as the Microfinance Act.

2. Applicability of Act.

(1) The provisions of this Act shall not apply to—

(a) a licensed commercial bank or a licensed specialized bank within the meaning of the Banking Act, No. 30 of 1988;

(b) a finance company within the meaning of the Finance Business Act, No. 42 of 2011;

(c) a co-operative society registered under the Co-operative Societies Law, No. 5 of 1972 and a co-operative society registered under a Statute of a Provincial Council;

(d) a divineguma community based bank and a divineguma community based banking society established under the Divineguma Act, No. 1 of 2013; and

(e) an entity formed in terms of the Agrarian Development Act, No. 46 of 2000.

(2) The provisions of this Act, other than Part VIII, Part IX and Part XI, shall not apply to a microfinance non-governmental organization and a micro credit non-governmental organization.

PART I

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