National Microfinance Study of Sri Lanka: Survey of Practices and ...

Credit Information Collection and Reporting
A Credit Information Bureau has been in operation for twelve years and this helps
to reduce credit risk and client indebtedness. Presently however it only serves
lending institutions that are its shareholders, who are: CBSL, the commercial
banks, the six licensed specialised banks, registered finance companies, regional
development banks, and some leasing companies and merchant banks.
The bureau currently doesn't address the needs of microfinance institutions and
only loans in excess of SLR 100,000 are recorded. For the bureau to be useful
from a microfinance perspective, it would need to include reliable information on
loans under SLR 100,000 (e.g. loans in the range of SLR 30,000-100,000) and
expand its market to include large microfinance wholesale and retailers.
Banking Regulation and Supervision
The CBSL is responsible for regulating and supervising commercial banks,
licensed specialised banks, and licensed finance companies as set forth in the
Monetary Law Act, the Banking Act and their amendments. Commercial banks
require minimum initial capital of SLR 500 million each, the RDBs were
launched with initial capital of SLR 150 million each, and savings and
development banks require SLR 100 million initial capital (ADB, 2000c: p. 297).
Standard international directives apply to regulated entities, covering areas such
as loan classification, provisioning and reporting requirements as well as auditing
standards. The SRR was recently lowered to 10%.
The regulatory and supervision practices of the CBSL have been strengthened in
recent years with regard to the entities under its jurisdiction. However, the bank
has not kept up with the growth of semi-formal financial service provision and
does not effectively supervise or protect the assets of the relatively poor.
Table 41 ‘Microfinance’ loans by Banks as of December 31, 2000
Institution/
Program
No. of
Active Loans
Amount
Outstanding
(SLR Million)
Average Amount
(SLR)
BoC 100,241 1,831 18,266
People’s Bank 194,000 1,940 10,000
HNB 9,237 379 41,031
Seylan Bank 4,500 99 22,000
Total 307,978 4,249 22,824
Notes: 1) BOC and PB figures are estimated number of active loans (between SLR 5,000 – SLR
100,000) and micro-credit outstanding as of June 30, 2001.2) Hatton National Bank and Seylan
Bank data is based on self-reported estimates for number and outstanding micro-credit as of June
30, 2001.