Innovation vital for micro-finance
Micro-finance is a well-established industry in the South Asian
region and it is also one of the booming industries in Sri Lanka.
However, to sustain in the micro-finance market, Sri Lanka has to
improve the external and internal governing practices as well as the
Government's regulatory practices, Honorary Senior Fellow, University of
Manchester, Dr. Thankam Arun told a seminar on Micro-finance Services in
Sri Lanka, organized by the Central Bank.
"Today micro-finance has developed as a highly competitive industry
and to sustain in the market innovation is essential. Implementing many
products to the market may help to reduce the cost of services," he
"One of the key areas that Sri Lanka is lacking in the micro-finance
industry is skilled human resources. It needs the skills of
understanding the financial literacy and the financial diversity of the
market. To improve the financial literacy skills it is essential to
organize regular seminar programs, workshops and training programs for
employees in the industry," he said. "Globally the minimum investment in
the micro-finance sector is US $ 25 billion.
It is vital to find a source to attract private capital to the
industry. Hence, micro-finance institutes should strengthen the
financial framework systematically,"
"In the near future Sri Lanka will identify the need of micro-finance
for the rehabilitation programs in the Northern and Eastern provinces.
Sri Lanka can foresee much expansion in the micro-finance industry in
these areas," he said.
"Due to the limited resources, most poor people experience great
financial hardships, when there are unexpected events - both man-made
and natural. Such adverse events have a significant effect on the income
of the poor and their consumption, which makes it hard for them to
recover from those shocks and makes them the most vulnerable group.
Hence, poor people require a greater level of support ahead of
Therefore, the poverty reduction strategies should essentially look
beyond the generation of income to include measures to protect the
income of the poor through effective risk management," said the Deputy
Governor, Central Bank of Sri Lanka, W.A. Wijewardena.
"The widespread existence of spurious micro-finance institutions in
the society projects the entire micro-finance industry as a fraudulent
activity in the eyes of the public and law enforcement authorities. This
is not a healthy sign for the future of the micro-finance industry at
all," he said.