Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010Therefore, the Cabinet of Ministers hastaken a decision on 07th July 2010 todraft the Microfinance Act to set up anauthority in the name of “MicrofinanceRegulatory and Supervisory Authority”to license/register, regulate andsupervise institutions that carry onmicrofinance business. The MonetaryBoard of the Central Bank of Sri Lankais empowered to set up principles andstandards to the regulators of MFIsincluding the Samurdhi Authority of SriLanka to ensure that the microfinancebusiness is carried on in a transparent,professional and prudent manner.Funding needs for the first twoyears of the proposed MicrofinanceRegulatory and Supervisory Authorityis approximately Rs. 400 million.Objectives of the MicrofinanceRegulatory and SupervisoryAuthorityThe objectives of the proposedMicrofinance Authority are as follows;a) License, register, regulate andsupervise companies, Non-Governmental Organizations,cooperative societies and societiescarrying out microfinance businessb) Strengthen and develop thoseinstitutions by enhancing theirviability and accountabilityc) Ensure that microfinance businessis carried on with integrity and ina transparent, professional andprudent manner with a view ofsafeguarding the interests of thedepositors and the customersForeign Assistance toMicrofinanceIn line with the technical cooperationbetween the Government of SriLanka and the Government of theFederal Republic of Germany, theImplementation Agreement forthe provision of grant of Euro 4.0million was signed between the twoGovernments on 26th March 2007 forthe implementation of the Promotionof the Microfinance Project.Promotion of MicrofinanceProject (ProMis) – GIZThe objective of this project is toenhance and improve the servicesoffered by selected MFIs to thepoorer section of the society andmicro and small enterprises in anappropriate manner. The project isbeing implemented by the GermanInternational Cooperation (GIZ) underthe purview of the Department ofDevelopment Finance. Phase I of thisproject was completed in 2009 and theGovernment of the Federal Republic ofGermany has agreed to provide Euro3.25 million to implement Phase II ofthe project for the period 2010 – 2012.Total disbursement for 2010 is Euro 1.0million.The project has three components:1. Develop the capacity ofmicrofinance institutions2. Support the development of themicrofinance sector3. Assist the development of aframework for microfinance policyand legislationMain Activities Completed for theYear 2010• Group formation forentrepreneurship, marketingand business developmentprogrammes• Livelihood support programme inJaffna• Technical trainings for specificentrepreneur groups• Training and Institutionalstrengthening of MFI partners• Eight events on ‘EnablingDialogue/ Knowledge sharing’were held in Colombo, Jaffna,Vavuniya, Batticaloa and AmparaDistricts with the participation oflocal authorities, NGOs engagedin microfinance and livelihooddevelopment activities, MFIs,Commercial Banks, Finance andLeasing Companies.d) Maintain the confidence of thedepositors and the customerse) Minimize risk of losses to thedepositors by establishing andenforcing effective standardsof governance, accounting anddisclosure• 149 resettled families weresupported for income generatingactivities• Financial Literacy NeedsAssessment was conducted in allDistricts where ProMiS partnersoperate.295